JPMorgan Chase CEO Jamie Dimon hopes the Federal Reserve can bring down inflation without causing a recession but wouldn’t rule out more troubling possibilities, such as stagflation.
In an interview with The Associated Press at a Chase branch opening in The Bronx, Dimon said he remained “cautious” about the U.S. economy. He said inflation may be stickier for longer and that “stagflation is on the list of possible things” that could happen to it.
“You should be worried about (the possibility of stagflation,” Dimon said.
Dimon did emphasize that he’s still “hopeful” that the U.S. economy will experience a soft landing where growth slows. Still, the economy avoids a recession even if inflation remains a little high, but he’s not sure that is the most likely outcome.
“I’m just a little more dubious than others that a (soft landing) is a given,” he said.
The Fed rapidly raised interest rates in 2022 and 2023 after inflation reached its highest level in four decades. Fed officials have indicated they expect to begin lowering rates at some point, but the timeline has been pushed back as inflation remains well above the central bank’s target rate of 2%.
Dimon spoke about various issues, including the economy, the independence of the Federal Reserve, the need for banks to open branches, and the pressing geopolitical issues of the day.
Inflation has been stubbornly elevated so far this year, and a report last Thursday showing growth slowed in the first three months of this year fanned fears of “stagflation,” which occurs when the economy is weak or in recession yet prices keep increasing. It’s a miserable combination of economic circumstances, high unemployment, and rising costs. Typically, a sluggish economy brings down inflation.
Stagflation last occurred in the 1970s when conditions were far worse than today. In 1975, for example, inflation topped 10% while the unemployment rate peaked at 9%. Inflation is now 3.5% and unemployment is just 3.8%, near a half-century low. If stagflation did occur, Dimon said he believes it would not be as bad as it was in the 1970s.
Fears of stagflation eased Friday after a government report showed consumer spending stayed strong in March. This suggests the economy will continue expanding at a solid pace in the coming months.
Dimon said he was “thrilled” that Congress passed the bipartisan national security bill that provided military aid to Ukraine, Taiwan and Israel. In previous comments, Dimon said it was necessary for “American leadership” to be on the world stage, or the U.S. would likely cede that position to China in the next century. Dimon had pushed hard for the U.S. to come up with the billions of dollars needed to aid Ukraine.
“I think it’s a perfect sign they want to get that done,” Dimon said, referring to House Speaker Mike Johnson and Senate leaders on both sides of the political aisle.
Dimon also emphasized the need for the Federal Reserve to remain independent, following a report by The Wall Street Journal this week that said advisers for former President Donald Trump were considering ways to curb the independence of the Fed should again be elected. The steps could include making the Fed’s chairman removable by the president or requiring the president to be consulted on any changes to interest rates.
“I don’t know what these people are thinking or how they think they are going to go about this,” Dimon said, saying that any changes would likely require legislation.
Chase opened its 17th “community center” branch on Friday. These larger branches are designed for low-to-moderate-income areas. They have multipurpose areas that offer workshops and financial literacy work for needy communities.
“These things are good business,” Dimon said. They lift neighborhoods to help our country. And we’re unabashed about it. I don’t understand why people say they shouldn’t be trying to lift your country.”
Glennys Arias, 43, lives in the Bronx and is an Uber driver. She’s been banking with Chase for six months and said she typically comes to use the ATM, cash checks, and check her credit.
She said the branch had met her needs and hadn’t heard about the expansion, upcoming classes, or events. “I didn’t know about any of that, but I’d come for that,” she said of the programming.
In off-the-cuff remarks, Dimon noted the steady stream of customers.
“I love the fact that so many people are walking in here. So many people are nervous about how they’ll be treated when they walk into a bank branch.”