Everyday Americans might feel anxious about inflation and tariffs, but according to JPMorgan Chase (JPM) CEO Jamie Dimon, Wall Street hasn’t even begun to worry enough — and that, he says, is a big mistake.
Speaking at his bank’s annual investor day meeting, Dimon warned that Wall Street is underestimating the risks of rising deficits, tariffs, and geopolitical tensions — describing the market’s current optimism as “an extraordinary amount of complacency.”
“We have huge deficits. We have what I consider almost complacent central banks,” Dimon said. “You all think they can manage all this. I don’t think they can.”
Dimon, the longtime CEO of America’s largest bank by assets, sees more turbulence ahead, and he thinks markets are priced for a reality that doesn’t exist. One of Dimon’s more pointed warnings came on the macroeconomic front. He believes the odds of stagflation — a mix of high inflation and stagnant growth (or even a recession) — could be much higher than what the market is currently predicting.
“When I’ve seen all these things adding up that are on the fringes of extreme, I don’t think we can predict the outcome, and I think the chance of inflation going up and stagflation is a little bit higher than other people think,” Dimon said. “There are too many things out there, and I think you’re going to see the effect.”
Dimon warned that corporate earnings forecasts are likely to be downgraded and that geopolitical threats are “very, very, very” high.
Markets have been whipsawing on fears of inflation, recession, and political maneuvering before rallying in recent weeks. Investors appear to be brushing off the economic threats tied to President Donald Trump’s tariffs — imposed in early April, softened a week later, and in place while the clock runs out on trade negotiations.
“My own view is people feel pretty good because you haven’t seen effective tariffs,” he said. “The market came down 10%, [and it’s] back up 10%. That’s an extraordinary amount of complacency.”
And the U.S.’ fiscal trajectory isn’t looking all that stable right now. Moody’s recently downgraded the country’s credit rating, citing surging deficits and political gridlock. Dimon echoed those concerns: “We’ve had 15 years of happy-go-lucky credit” with more risk embedded in the system than most people recognize.
“So, I think I would expect that credit would be worse than people think of in every recession,” he said.
A problem, Dimon said, is that the president’s tariffs are still “pretty extreme,” even at their current levels, and could have serious inflationary consequences. He said an issue is that “you don’t know how every country is going to respond” — but some trading partners are responding by making deals with other countries. The U.S. can’t easily substitute domestically produced goods for foreign imports; new manufacturing capacity could take three to four years (at least) to come online.
So while investors might be feeling good right now, Dimon’s message is simple: The calm before the storm is over.
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