"Wall Street's Top Dog" Issues Another Warning: The US Economy May Fall into Stagflation, and the US Fed's Wait-and-See Approach Is Right!

Jamie Dimon, CEO of JPMorgan Chase, often referred to as the "King of Wall Street," warned again on Thursday that he could not rule out the possibility of the US economy slipping into stagflation due to significant risks such as geopolitical tensions, fiscal deficits, and price pressures.

Dimon expressed these views at the JPMorgan Global China Summit held in Shanghai on the same day. In an interview with the media, he said: "I don't think we're in the best shape. The US Fed is right to adopt a wait-and-see approach before deciding on monetary policy."

Since the beginning of the year, amid the backdrop of US President Trump's indiscriminate use of "tariff sticks," the economic outlook has been fraught with uncertainty, and the US Fed has maintained a wait-and-see stance, keeping interest rates unchanged. Officials believe that the risks of both inflation and unemployment rising are increasing.

Alberto Musalem, President of the Federal Reserve Bank of St. Louis, pointed out this week that while tariff plans may have been scaled back, they "still seem likely to have a significant impact on the near-term economic outlook," with "a direct one-time impact on the prices of imported final goods, an indirect impact on the prices of domestically produced goods and services, and potentially a second-round impact on inflation."

He added that prematurely concluding that inflationary impacts will dissipate on their own "could underestimate the level and persistence of inflation" and trigger more inflationary problems in the future.

Dimon emphasized, "I think the likelihood of rising inflation and stagflation is higher than what others believe."

Earlier this week, he also warned that market and central bank officials were underestimating the risks posed by the US's record deficits, tariffs, and international tensions. He believes that the risks of heightened inflation and even stagflation are not adequately reflected in stock market valuations.

"My personal view is that people feel too good about themselves because you haven't seen the actual impact of tariffs yet. The market fell by 10% and then rebounded by 10%. This is an extraordinary level of complacency. We have huge deficits; our central bank, in my view, is almost complacent. You all think they can handle everything. I don't think they can," he said.

In his latest interview, Dimon also mentioned the Sino-US trade friction, commenting, "I don't think the US government wants to decouple from China. I hope they have a second, third, or fourth round (of negotiations) and that they can reach a good conclusion."

Earlier this month, the US and China "mutually reduced tariffs" after talks in Geneva, signaling a easing of trade friction between the world's two largest economies, sending a positive signal to the global market and alleviating market tensions. The US will reduce tariffs on Chinese goods from 145% to 30% within 90 days. During the same period, China will reduce tariffs from 125% to 10%.

On the other hand, Dimon added that the US must "address the deficit issue," and he also understands why investors might reduce their exposure to US dollar assets.

"I'm not worried about short-term fluctuations in the US dollar. But I do understand that people may be reducing their exposure to US dollar assets," he added.