JPMorgan Chief Jamie Dimon Warns US Economy Faces an Outcome Worse Than a Recession

JPMorgan Chase CEO Jamie Dimon has said he would not rule out an outcome for the US economy which is widely considered to be worse than a recession.

The chief executive of the biggest bank in the US said this week ‘the worst income is stagflation,’ which he would not ‘take off the table.’

Economists consider stagflation, last seen in the US in the 1970s, to be worse than a recession. It would send stocks down, hitting 401(K)s and other retirement savings.

Stagflation is the combination of economic stag-nation and in-flation. Prices continue to soar at the same time as unemployment rises and economic growth slows – a triple whammy of problems.

In a recession, unemployment increases and the economy shrinks – but the silver lining is that there is little or no inflation.

Dimon made the comments at a time when economists are turning their attention toward indicators of potential slowing growth.

While the annual rate of inflation is increasingly moving toward the Federal Reserve’s 2 percent target, reports on employment and manufacturing have revealed some signs of softening, CNBC reported.

Since taking over in 2006, Dimon, 68, has turned JPMorgan Chase – which has retail as well as investment arms – into the world’s biggest and most powerful bank with $4 trillion in assets.

Dimon said on Tuesday at a fall conference from the Council of Institutional Investors in New York City: ‘I would say the worst outcome is stagflation – recession, higher inflation.

‘And by the way, I wouldn’t take it off the table.’

On Wednesday, latest data from the Bureau of Labor Statistics revealed consumer prices were up 2.5 percent from a year earlier in August.

This is down from a 2.9 percent annual rate in July – and is the lowest rate of yearly price growth since February 2021.

This downward trend toward the Fed’s 2 percent inflation target paves the way for the central bank to cut interest rates at its next meeting on September 18.

This will bring benchmark borrowing costs down from a 23-year high and provide some relief for households.

But Dimon worries that there are still a raft of inflationary forces on the horizon, according to CNBC.

He pointed out that higher deficits and increased Government spending will add pressure to an economy still reeling from the impact of sustained higher interest rates.

‘They’re all inflationary, basically in the short run, the next couple of years,’ Dimon said.

‘So, it’s hard to look at [it] and say, “Well, no, we’re out of the woods.” I don’t think so.’

The Treasury Department announced Thursday that the US Government has spent more than $1 trillion this year on interest payments for the $35.3 trillion national debt.

This is the first time interest payments have crossed over this benchmark figure.

Dimon has previously warned of an economic slowdown, saying that he would also not rule out a ‘hard landing’ for the US economy.

A ‘hard landing’ is when there is a marked economic slowdown following a period of rapid growth.

Other economists have predicted that the US is on track to stick a ‘soft landing’ – which has only happened once before.

This rare slowdown is when the rate of inflation returns to the Fed’s 2 percent target without triggering a recession.

Dimon, however, said in August that he thinks the odds of this happening are around 35 percent to 40 percent, CNBC reported, implying a recession is the more likely outcome.