JPMorgan's CEO Warns Stagflation Could Worsen the U.S. Economy

What Happened?

The CEO of America's largest bank recently announced he's preparing for multiple economic scenarios, including one that economists predict is worse than a recession.

Jamie Dimon of JPMorgan Chase told Bloomberg on Thursday that he and his team view that stagflation is still a possibility for the U.S. economy.

Stagflation is an economic event in which the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high.

'I think global fiscal deficits are inflationary. I think the remilitarization of the world is inflationary. The restructuring of trade is inflationary,' Dimon said.

He adds that the Federal Reserve made the correct decision to hold rates steady, given the risks of raising inflation by loosening policy too soon.

According to the U.S. Department of Labor, the number of Americans filing unemployment claims last week fell slightly despite growing economic uncertainty.

Applications for jobless benefits fell by 2,000 to 227,000 for the week ending May 17.

It's close to the 230,000 new applications analysts forecast, according to reports.

Why it Matters

May's Fed meeting marked what experts called an unusual period amid President Donald Trump's moves over U.S. trade policy.

The real estate industry is also facing the added pressure of stagflation as the ongoing strain has caused frustration for both consumers and sellers.

Mortgage rates are inching back toward 7%, the highest level since mid-February, according to data released Thursday from Freddie Mac.

As a result, home sales in April fell, as consumers faced high home prices and growing concerns over the economy and employment.

According to the National Association of Realtors, sales of previously owned homes in April declined 0.5% from March to a seasonally adjusted, annualized rate of 4 million units.

It's the slowest April pace since 2009 NAR explained.

Dimon said Thursday at JPMorgan's Global China Summit that President Trump's massive tax and spending bill could help bring stability.

But he believes it'll probably add to the deficit furthering inflation.

How it Affects You

Trump’s moves on tariffs have left a heavy imprint on the U.S., experiencing its worst economic quarter since 2022.

As the Fed awaits 'for greater clarity' before considering future cuts, experts warn of greater risks if the economy this year remains stagnant.

The U.S. and China have recently agreed to lower their reciprocal tariffs, which lays the groundwork for both countries to create supportive economic conditions.

But U.S. growth could still decline this year by two percentage points as big businesses like Target and Walmart worry tariffs could drive up consumer costs.

It all increases the probability Dimon says the U.S. economy should prepare for.