The possibility of stagflation remains a possibility, as August inflation came in below expectations.
The CEO of JPMorgan Chase has revealed a “dangerous outcome” for the future of the US economy that goes beyond a recession.
“The worst outcome is stagflation,” Dimon said. “And I wouldn't rule stagflation out, by the way.”
Jamie Dimon, 68, made the remarks at the Council of Institutional Investors in New York on Tuesday.
Inflation rises by less than expected 2.5% in August
JPMorgan Chase is the largest bank in the United States with assets of $3.4 trillion, according to Bankrate.
Stagflation is a combination of the words stagnation and inflation, and refers to a state of slowing economic growth and rising inflation and unemployment.
The economic effects of stagflation can lead to reduced retirement savings and a stock market crash. The last time stagflation was seen in the United States was in the 1970s, according to Investopedia.
Jamie Dimon, chairman and CEO of JPMorgan Chase, testifies during a Senate Banking Committee hearing at the Hart Senator's Office Building in Washington, DC on December 6, 2023. The committee heard testimony from the largest financial institutions. (Win McNamee/Getty Images)
Inflation in August came in at a lower than expected 2.5%, but the outlook for the Federal Debt remains bleak, having increased to $35,309,184,612,870.00 as of September 12th.
Consumers expect inflation to ease, worried about job market and personal debt: NY Fed survey
Interest on the national debt due in October currently exceeds the cost of both Medicare and the defense budget. The national debt could drive further inflation in the future.
This is the first time in American history that interest payments on the national debt have exceeded $1 trillion.
“So it's hard to watch. [it] “And then they'll say, 'No, we're out of the woods.' I don't think so,” Dimon said.
Jamie Dimon, chairman and CEO of JPMorgan Chase, speaks at an Economic Club of New York (ECNY) event in New York, USA, Tuesday, April 23, 2024. Dimon met with executives from the World Bank Group and several other companies. (Victor J. Blue/Bloomberg via Getty Images/Getty Images)
While inflation has fallen to nearly reach the Fed's 2% target, consumers have a generally mixed outlook for the market, according to a report released Monday by the Federal Reserve Bank of New York.
The survey found that Americans expect their spending to increase by 5%, but that their household income will only be 0.1 percentage point higher than last year.
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As CNBC reported in August, Dimon believes the future chance of stagflation is about 35 percent, meaning a recession is likely.
