Written by Ken Sweet
NEW YORK (AP) – JPMorgan CEO Jamie Dimon says stagflation is one of the many possible outcomes for the U.S. economy as the Federal Reserve seeks to rein in persistently high consumer prices. He said it could be one of the.
In an interview with The Associated Press at his newly opened Chase branch in the Bronx, Mr. Dimon said he remains “cautious” about the U.S. economy, adding that inflation could remain strong for an extended period of time and that “there are many things that could happen.” The list includes stagflation.” to the US economy.
“We should be concerned about (the possibility of stagflation),” Dimon said.
Mr. Dimon stressed that he remains “hopeful” the U.S. economy will experience a soft landing (inflation stays slightly higher but growth slows but a recession is avoided), but that He said he didn’t know if that was the most likely outcome.
“I’m a little more skeptical than others that (a soft landing) is warranted,” he said.
The Fed sharply raised interest rates in 2022 and 2023 as inflation reached a 40-year high. Fed officials have said they expect to begin lowering rates at some point, but the date has been delayed because inflation remains well above the central bank’s 2% target rate.
Dimon spoke to The Associated Press about a variety of issues, including the independence of the Federal Reserve, the health of U.S. consumers, the need for banks to open branch offices and the pressing geopolitical issues of the day.
Inflation has been stubbornly rising so far this year, with Thursday’s report showing growth slowed in the first three months of the year, with prices rising even though the economy is weak or in recession. This has sparked concerns about “stagflation” that could occur if the situation continues. This is a combination of particularly dire economic conditions, with high unemployment rates along with rising costs. A weak economy usually lowers inflation.
The last time stagflation occurred was in the 1970s, when conditions were much worse than they are now. For example, in 1975 the inflation rate exceeded 10% and the unemployment rate reached 9%. Inflation is currently 3.5% and unemployment is just 3.8%, near half-century lows. Dimon said he believes that if stagflation does occur, it won’t be as bad as it was in the 1970s.
Concerns about stagflation eased on Friday after a government report suggested consumer spending remained strong in March and the economy will continue to expand at a solid pace in coming months.