JPMorgan Chase CEO Jamie Dimon just issued a fresh warning on the state of the US economy.
At a New York conference from the Council of Institutional Investors covered by CNBC, Dimon warned that ongoing “inflationary forces” like rising deficits could trigger a worst-case economic outcome.
“I would say the worst outcome is stagflation – recession, higher inflation. And by the way, I wouldn’t take it off the table…
They’re all inflationary, basically in the short run, the next couple of years. So, it’s hard to look at and say, ‘Well, no, we’re out of the woods.’ I don’t think so.”
Last week, the Bureau of Labor Statistics (BLS) said the Consumer Price Index (CPI) rose by 2.5% in August, the lowest year-over-year increase in three years.
The Federal Reserve, which is poised to begin lowering interest rates at its next meeting on September 18th, says its target rate of yearly inflation for Americans is 2%.
Shares of JPMorgan Chase plummeted last week after the bank warned that its estimates for net interest income (NII) were likely overblown.
At a conference in New York, JPM’s president and chief operating officer Daniel Pinto told investors that the $90 billion NII expectations were a “bit too high,” Reuters reports.
NII refers to the difference between revenue generated from a bank’s interest-bearing assets and its expenses for paying out interest-bearing liabilities.
According to a report from Quartz, Pinto also said that he still expects JPMorgan Chase’s performance to be good in the future, despite the reduced NII estimates.
“Clearly, as rates go lower, you have less pressure on repricing of deposits. But as you know, we are quite asset sensitive.
The performance of the company in the long term, it will be great… The performance of the company next year will be very good too. But the NII expectations are going to be too high.”
The comments fueled a 7% drop in JPMorgan Chase’s stock (JPM), its worst day since 2020. JPM is currently trading at $204, up 18.74% year-to-date despite the correction.
Generated Image: Midjourney