Jamie Dimon, JPMorgan Chase’s chairman and CEO, says the U.S. economy could see a “hard landing. Meanwhile, he warned that the worst-case scenario for the U.S. economy would be a ”stagflation“ scenario in which inflation would continue to rise but economic growth would slow amid high unemployment. "With this development, corporate profits will decline, and we'll get through all of that," Dimon said, adding that the consumer is still in good shape, even if the economy slips into recession.
Meanwhile, Dimon pointed to a low level of consumer confidence, which is mainly due to the still high inflation. Yesterday, the minutes of the Fed's May meeting showed that policymakers have become more concerned about inflation, with FOMC members indicating they lacked confidence to ease monetary policy and cut rates. Last week, the Labor Department said that the U.S. consumer price index (CPI) increased 0.3% m-o-m in April, following an unrevised 0.4% m-o-m gain in the previous month. This was the softest one-month rise in headline CPI in three months. Over the last 12 months, the CPI climbed by 3.4% y-o-y, slowing from an unrevised soar of 3.5% y-o-y reported for the period ending in March. Economists had forecast the U.S. CPI to move up 0.4% m-o-m and 3.4% y-o-y. The core CPI, excluding volatile food and fuel costs, went up 0.3% m-o-m in April after an unrevised 0.4% m-o-m gain in the previous month. This represented the smallest monthly increase in core CPI since December 2023. In the 12 months through April, the core CPI surged by 3.6%, following an unrevised 3.8% increase for the 12 months ending March. This marked the weakest 12-month rise since April 2021. Economists had expected the core CPI to rise by 0.3% m-o-m and 3.6% y-o-y in April.
As for the monetary policy outlook, Dimon said U.S. interest rates could still rise "a little bit" given more sustained inflation than people think. When asked about the prospects and timing of a rate cut, Dimon replied that market expectations “are pretty good, but they're not always right.” According to the CME FedWatch Tool, markets see a 4.2% probability of a 25 basis point rate cut at the Fed meeting in June, a 18% probability of a rate cut in July, and a 59.8% probability of monetary policy easing in September.