JPMorgan Chase CEO warns ‘extraordinary’ government spending will trigger severe economic fallout

JPMorgan Chase CEO Jamie Dimon just issued a major warning about where the U.S. economy is headed.
At AllianceBernstein’s strategic decision meeting, Dimon bet that uncontrolled government spending will end in stagflation – a term for the scary combination of high inflation, high unemployment and low growth, Fortune reported.

“We look at the amount of fiscal and monetary stimulus that has been put in place over the last five years. It was really special. How can you say it won’t lead to stagflation?
Maybe not. But I’m well prepared for it.”
At the Big Bank Global Summit in Shanghai a week ago, Dimon told CNBC he believes the Fed may not be able to complete the rate hike.
“I think inflation is more persistent than people think. I think the odds are higher than others think. That’s because a huge amount of fiscal and monetary stimulus is still in the system and may still be driving some of the liquidity.
I look at the range of outcomes and again, the worst outcome for all of us is what I call stagflation, high interest rates and recession. “That means corporate profits will go down and we’ll get through it all.”
Dimon’s economic outlook is consistent with warnings made by JPMorgan’s chief market strategist Marko Kolanovic several months ago.
“We believe that the Goldilocks story, which has important implications for asset allocation, risks returning to something like the stagflation of the 1970s.
“Investors should be open to the possibility that there is a scenario where interest rates will have to stay high for longer and the Fed may have to tighten financial conditions.”
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