'Dubious About A Soft Landing': JPMorgan Chase CEO Jamie Dimon Warns Of Possibility Of Stagflation

Jamie Dimon, the chief executive of JPMorgan Chase, warned that the chance of the U.S. economy making a “soft landing” is not a certainty, coming amid volatility spikes seen in the major U.S. stock indexes over the past week.

“There’s a lot of uncertainty out there,” Dimon told CNBC on Wednesday. “I’ve always pointed to geopolitics, housing, the deficits, the spending, the quantitative tightening, the elections, all these things cause some consternation in markets.”

For the past few years, Dimon has been issuing warnings about persistently high inflation and whether a soft landing, meaning the economy would avoid a recession, is feasible.

The executive added that he’s not sure whether the Federal Reserve can meet its inflation goal of about 2 percent. He told CNBC that the chance of a soft landing is about 35 or 40 percent.

“There’s always a large range of outcomes,” Dimon said. “I’m fully optimistic that if we have a mild recession, even a harder one, we would be okay. Of course, I’m very sympathetic to people who lose their jobs. You don’t want a hard landing.”

In April, in an interview with The Associated Press, he said that people “should be worried about” the possibility of stagflation but was still hopeful for a soft landing. “I’m just a little more dubious than others that a [soft landing] is a given,” he said at the time.

The Federal Reserve rapidly raised interest rates in 2022 and 2023 after inflation hit the highest levels in decades. Officials with the central bank said they want to lower rates at some point with the 2 percent goal as their target.

Dimon’s prediction comes as the three major U.S. stock indexes saw another loss on Wednesday as tremors from Monday’s plunge continue to reverberate. But on Thursday’s opening, the Dow Jones Industrial Average rose 0.69 percent, or about 300 points, while the Nasdaq Composite index increased nearly 1 percent. The S&P 500 also rose nearly 1 percent Thursday morning.

The market rose as it was reported by the U.S. Department of Labor that first-time filings for jobless benefits fell to 233,000 for the past week, or a decline of 17,000 from the previous one. New U.S. unemployment claims have been rising and hit their highest since August last year in the most recent week before that.

Other Activity

Outside the United States, European shares fell and Japan’s Nikkei 225 index closed 0.7 percent lower, undoing some of the calm a day earlier when the Bank of Japan (BOJ) indicated it would be more cautious with any future interest rate increases. The South Korea-based Kospi index also dropped slightly, closing down 0.45 percent.

Deputy BOJ Governor Shinichi Uchida told reporters and business leaders in the Japanese city of Hakodate on Wednesday that the central bank will not increase interest rates when markets are experiencing instability.

“As we’re seeing sharp volatility in domestic and overseas financial markets, it’s necessary to maintain current levels of monetary easing for the time being,” Uchida said, adding that the interest rates will “obviously” be changed if the volatility affects the price outlook.

But he stressed that “we won’t raise interest rates when financial markets are unstable.”

Europe’s continent-wide Stoxx 600 index fell 0.9 percent after climbing 1.5 percent on Wednesday. Germany’s DAX index was down 0.6 percent and Britain’s FTSE 100 decreased by 1 percent.

In late August, Federal Reserve Chair Jerome Powell is expected to offer remarks on what he believes the United States needs when global bankers and Fed officials gather at an annual economic symposium in Jackson Hole, Wyoming. After that, the Fed’s Open Market Committee is slated to meet in mid-September.

“If we do get the data that we hope we get, then a reduction in our policy rate could be on the table at the September meeting,” Powell said last week.

Reuters contributed to this report.