Jamie Dimon sees stagflation's storm clouds coming for the US, sounds alarm for economy

JPMorgan Chase CEO Jamie Dimon has said he cannot rule out a scenario in which the United States slips into stagflation, as reported by Bloomberg News on Thursday. Speaking to Bloomberg Television at the Global China Summit in Shanghai, Dimon said, “I don’t agree that we’re in a sweet spot.”

He argued that the country faces significant risks stemming from ongoing geopolitical conflicts, mounting fiscal deficits, and persistent price pressures. When asked about the central bank’s current stance, he backed the US Federal Reserve’s measured approach, stating, “The US Federal Reserve is doing the right thing to wait and see before they decide on monetary policy.”

Inflation worries and the Fed's hold

Earlier this month, the Federal Reserve kept interest rates steady, despite acknowledging that the dangers of both rising inflation and unemployment had increased. Dimon echoed these concerns in previous remarks, saying, “I think the chance of inflation going up and stagflation is a little bit higher than other people think.”


The Federal Reserve’s caution reflects unease over economic policies, especially tariffs, and their longer-term consequences. Dimon’s concerns reinforce that view — suggesting policymakers may face tougher choices ahead.

Trade tensions with China still loom large

Tensions between the US and China have yet to fully ease. Although both nations agreed to a 90-day reduction in tariffs earlier this month, a long-term resolution remains elusive. Talks are expected to be complicated and contentious.

Dimon offered his view on the matter, saying, “I don’t think the American government wants to leave China. I hope they have a second round, third round or fourth round and hopefully it will end up in a good place.”

Despite the temporary truce, analysts believe President Trump’s tariffs could continue to limit Chinese exports well after the current pause ends.

Wall Street pauses amid uncertainty

Beyond geopolitics, Trump’s abrupt policy announcements and attempts to scale back federal institutions have left markets on edge. Bank executives report that firms are holding back expansion plans. Even major Wall Street mergers and acquisitions are stalling.

JPMorgan, the largest US bank, has also felt the effects. Troy Rohrbaugh, co-CEO of JPMorgan’s commercial and investment banking division, noted that its investment banking fees may fall by a percentage in the mid-teens compared to the same period last year — a steeper drop than most analysts had expected.

In response to these growing uncertainties, JPMorgan has launched its “Centre for Geopolitics” — a new unit aimed at strengthening the bank’s analysis on global flashpoints including Russia, Ukraine, the Middle East, and broader rearmament trends.

Dimon explained the purpose, saying, “The unit is both for us, and it’s also to educate clients. Clients ask us all the time, what should we do about this country. How do you look at risk?”

The move signals how seriously financial institutions are treating the intersection of global politics and market dynamics.

Dollar and deficit doubts

Dimon also drew attention to the country’s growing fiscal imbalances. He remarked, “The US has to attack the deficit problems,” adding that he understands why investors may be pulling back from dollar-based assets.

He continued, “I don’t worry about short-term fluctuations in the dollar. But I do understand people might be reducing dollar assets.”

These comments come just as House Republicans unveiled a revised version of President Trump’s tax and spending bill, which includes higher state and local tax deduction limits aimed at reconciling internal party divisions.

US Treasury markets have also been responding to rising economic anxiety. On Wednesday, longer-term Treasury bonds were hardest hit in a wider sell-off. The 30-year bond yield briefly spiked by 13 basis points, reaching nearly 5.10% — the highest since 2023.

An auction of 20-year debt drew only modest interest. By Thursday, markets in Asia had stabilised, though investor caution remained clear.

(With inputs from Reuters, Bloomberg)