JPMorgan Chase CEO Jamie Dimon has warned that the U.S. economy could face stagflation, a situation where inflation rises while economic growth stalls. He pointed to major risks from geopolitical tensions, large government deficits, and ongoing price pressures.
Speaking at JPMorgan’s Global China Summit in Shanghai, Dimon said, “I don’t agree that we’re in a sweet spot.” He praised the Federal Reserve for its cautious approach, saying it is wise to wait before making further changes to monetary policy.
The Federal Reserve has kept interest rates steady this year amid a stable economy but remains concerned about rising inflation and unemployment risks.
This caution reflects uncertainty over trade policies, especially tariffs imposed by the Trump administration, which could hurt economic growth. Earlier this month, the U.S. and China agreed to a 90-day tariff reduction to negotiate a new trade deal, but tariffs are expected to remain high afterward.
Dimon expressed hope for continued negotiations with China, saying, “I hope they have a second round, third round or fourth round and hopefully it will end up in a good place.”
He also noted that Trump’s unpredictable tariff policies and government agency cuts have raised worries about trade, inflation, and a possible recession. These concerns have led companies to pause expansions and mergers, affecting Wall Street activity.
JPMorgan recently launched a “Center for Geopolitics” to study risks from global conflicts and help clients understand geopolitical threats. Dimon said clients frequently ask how to manage risks related to different countries. The bank expects investment banking fees to fall this year due to the uncertain environment.
Dimon also stressed the need to address the U.S. budget deficit and acknowledged why some investors might reduce their holdings of U.S. dollar assets.
On the same day, House Republicans proposed changes to Trump’s tax and spending plan to win broader support. Meanwhile, U.S. Treasury bonds saw a selloff, pushing long-term yields higher.
Dimon concluded, “I don’t worry about short-term fluctuations in the dollar, but I do understand people might be reducing dollar assets.” His warnings highlight the fragile balance facing the U.S. economy amid global and domestic challenges.
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