Jamie Dimon, CEO of JPMorgan Chase, has warned that inflation could go up again, leading to higher interest rates and—possibly—recession.
JPMorgan CEO Jamie Dimon has warned that inflation could accelerate again and that a recession could well materialize if the Federal Reserve takes interest rates higher in response to resurging price pressures.
“A lot of things out there are dangerous and inflationary. Be prepared,” Mr. Dimon said at the 2023 New York Times DealBook Summit in New York on Nov. 29, during which he said that geopolitical tensions and the energy transition were prompting governments to ramp up spending, which is inflationary.
A new inflationary spike would pressure the Fed to raise interest rates further, which would have a cooling effect on the economy.
“Interest rates may go up, and that might lead to recession,” Mr. Dimon said, while expressing caution about the economy, especially the effect that inflation has had on U.S. households.
Like other business leaders before him, Mr. Dimon said that stimulus cash doled out during the COVID-19 pandemic bolstered consumer spending and propped up the economy, but its effects are fading.
He added that the Fed’s fast pace of raising interest rates (which went from zero to more than 5 percent at the quickest pace since the 1980s), along with a reversal of its quantitative easing program, were squeezing the economy and consumers.
So far, there’s been a limited effect of higher interest rates and geopolitical tensions on U.S. consumers, who have continued to spend despite signs of an economic slowdown.
Consumer spending is a key driver of the economy, accounting for roughly two-thirds of economic output.
‘Most Dangerous Time’ In Decades Is Here
Earlier, Mr. Dimon sounded the alarm that U.S. consumers were running down their excess cash buffers while issuing a somber warning that “the most dangerous time” the world has seen in decades has arrived.
While warning of clouds on the horizon of consumer spending, “extremely” high government debt levels, and the largest peacetime fiscal deficits in U.S. history, Mr. Dimon said in mid-October that he sees a growing risk that inflation stays high and that the Fed will raise interest rates even higher.
By Tom Ozimek
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