JPMorgan Chase CEO Jamie Dimon remains hopeful that the Federal Reserve can successfully navigate the U.S. economy to a soft landing, bringing down inflation without triggering a recession. However, in an interview with The Associated Press at the opening of a Chase branch in The Bronx, Dimon cautioned that stagflation, a particularly miserable combination of economic circumstances characterized by high unemployment and rising costs, is a possible scenario.
"You should be worried about (the possibility of stagflation)," Dimon said, while emphasizing that he's still optimistic about the chances of a soft landing. "I'm just a little more dubious than others that a (soft landing) is a given," he added, expressing his reservations about the most likely outcome for the U.S. economy.
Inflation has remained stubbornly elevated throughout the year, with a report released Thursday showing slowed growth in the first quarter, fueling fears of stagflation. Typically, a sluggish economy helps to bring down inflation, but in the case of stagflation, prices continue to rise despite weak economic conditions.
Dimon noted that while stagflation last occurred in the 1970s under far worse conditions, with inflation topping 10% and unemployment peaking at 9%, the current situation is less severe. Inflation is now at 3.5%, and unemployment is near a half-century low at 3.8%. If stagflation were to occur, Dimon believes it would not be as severe as it was in the 1970s.
Fears of stagflation eased somewhat on Friday following a government report that showed strong consumer spending in March, suggesting that the economy will continue to expand at a solid pace in the coming months.
During the interview, Dimon also stressed the importance of maintaining the Federal Reserve's independence, in response to a report by The Wall Street Journal indicating that advisors to former President Trump were considering ways to curb the central bank's autonomy should he be re-elected. Potential 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, noting that any such changes would likely require legislation.
The interview took place at the opening of Chase's 17th "community center" branch, designed to serve low-to-moderate income areas. These larger branches offer multipurpose areas for workshops and financial literacy programs aimed at supporting communities in need.
Glennys Arias, a 43-year-old Uber driver from the Bronx who has been banking with Chase for six months, said the branch has met her needs, though she was unaware of the expansion or upcoming classes and events. "I didn't know about any of that, but I'd come for that," she said, expressing interest in the programming.
Dimon, in off-the-cuff remarks, noted the steady stream of customers at the branch opening, saying, "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."
