{"id":47,"date":"2025-05-23T00:30:38","date_gmt":"2025-05-23T00:30:38","guid":{"rendered":"https:\/\/velvetcase.com\/?p=47"},"modified":"2025-05-23T00:32:39","modified_gmt":"2025-05-23T00:32:39","slug":"jpmorgans-jamie-dimon-warns-u-s-faces-stagflation-risk-despite-trump-tax-and-spend-bill","status":"publish","type":"post","link":"https:\/\/velvetcase.com\/index.php\/2025\/05\/23\/jpmorgans-jamie-dimon-warns-u-s-faces-stagflation-risk-despite-trump-tax-and-spend-bill\/","title":{"rendered":"JPMorgan\u2019s Jamie Dimon Warns U.S. Faces \u2018Stagflation Risk\u2019 Despite Trump Tax-and-Spend Bill"},"content":{"rendered":"\n

May 22, 2025\u2002|\u2002New York & Shanghai<\/strong> \u2013 JPMorgan Chase & Co. chief executive Jamie Dimon sounded the alarm on Thursday, telling investors that the United States could slide into a period of stagflation<\/strong>\u2014the toxic mix of slow growth and stubborn inflation\u2014even as Congress advances President Donald Trump\u2019s sweeping tax-and-spending package.<\/p>\n\n\n\n

Speaking at the bank\u2019s Global China Summit<\/strong> in Shanghai, Dimon said the legislation \u201cwill stabilise things a little bit, but it\u2019ll probably add to the deficit,\u201d and he cautioned that elevated debt levels, renewed tariffs and geopolitical tensions have pushed the odds of stagflation \u201ca little bit higher than other people think.\u201d Reuters<\/a><\/p>\n\n\n\n

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A Giant Bill With a Giant Price Tag<\/h3>\n\n\n\n

The House of Representatives cleared a key procedural hurdle on Wednesday, setting up a final vote that could send the so-called American Growth & Security Act<\/strong> to the president\u2019s desk as soon as this weekend. The package combines permanent corporate-tax cuts with targeted consumer rebates and new manufacturing incentives and is estimated to add $3.8 trillion<\/strong> to the national debt over ten years, according to the Congressional Budget Office.<\/p>\n\n\n\n

Moody\u2019s stripped the U.S. of its last remaining triple-A credit rating on May 15, explicitly citing the acceleration in federal borrowing; Dimon referenced that downgrade in warning that \u201cthe deficit will be large and probably growing\u201d under the bill. Reuters<\/a><\/p>\n\n\n\n

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Why Dimon Sees Stagflation on the Horizon<\/h3>\n\n\n\n
Risk Factor<\/th>Dimon\u2019s Concern<\/th>Economic Implication<\/th><\/tr><\/thead>
Persistent Core Inflation<\/strong><\/td>Wage growth remains above pre-pandemic norms, while tariffs on imported consumer goods add fresh price pressure.<\/td>Fed may be forced to hold rates higher for longer, choking growth.<\/td><\/tr>
Ballooning Deficit<\/strong><\/td>New spending plus slower growth widens the fiscal gap just as interest costs hit a record $1 trillion annually.<\/td>Higher Treasury issuance competes with private credit, lifting yields.<\/td><\/tr>
Geopolitical Shocks<\/strong><\/td>Middle-East supply disruptions and renewed U.S.\u2013China frictions can trigger energy or supply-chain price spikes.<\/td>Firms postpone cap-ex; real GDP decelerates while CPI stays elevated.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Dimon told Bloomberg earlier in the day he \u201ccan\u2019t rule out\u201d stagflation as the confluence of deficits, tariffs and geopolitical risk squeezes policy options. Reuters<\/a><\/p>\n\n\n\n

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Market Reaction: Caution and Hedging<\/h3>\n\n\n\n

U.S. equity indexes chopped sideways on Thursday as Treasury yields edged up:<\/p>\n\n\n\n