JPMorgan CEO Jamie Dimon cautioned Thursday against high optimism of a "soft landing" in the U.S. economy's battle against inflation, warning not to "get lulled into a false sense of security."
Dimon made the comments in an interview with The Wall Street Journal. Dimon said he fears the economy heading more toward the hard landing of the 1970s over the soft landing of the mid-1990s, when Alan Greenspan orchestrated a soft landing and avoided a recession by preemptively raising rates.
"The odds of a soft landing, the market kind of prices at 70%, I think it's half of that," Dimon told the Journal. "It looks a little bit more like the '70s to me, and I point out to a lot of people, things looked pretty rosy in 1972 — they were not rosy in 1973."
Dimon warned of the parallels of high unemployment and inflation of the '70s versus weak economic growth — or "stagflation" — to present day, as the effect of interest rates on inflation have flatlined.
"Don't get lulled into a false sense of security that because today looks OK, tomorrow is going to be OK," Dimon told the Journal.
At issue is that the current strong economy is still being buoyed by the massive amount of spending by the Biden administration.
"The deficit is 6% of GDP [gross domestic product], almost $2 trillion," Dimon said. "That's driving a lot of this growth and that will have other consequences, possibly down the road, called inflation, which may not go away like people expect."
His comments mirror those he made in a shareholder letter earlier this month.
"It is important to note that the economy is being fueled by large amounts of government deficit spending and past stimulus," Dimon wrote. "There is also a growing need for increased spending as we continue transitioning to a greener economy, restructuring global supply chains, boosting military expenditure and battling rising healthcare costs. This may lead to stickier inflation and higher rates than markets expect."
Mark Swanson ✉
Mark Swanson, a Newsmax writer and editor, has nearly three decades of experience covering news, culture and politics.
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