Long-Cautious Jamie Dimon Has Another Economic Warning

Some market watchers suspect the Fed won't cut rates at all in 2024. JPMorgan Chase CEO Jamie Dimon sees the potential for things to move sharply in the other direction. In an annual letter to JPMorgan Chase shareholders released Monday, Dimon warned that while he expects the US economy to be resilient and grow this year, it's possible interest rates could hit 8% or even more in the coming years, up from the Fed's current benchmark rate range of 5.25% to 5.5%.

• "Huge fiscal spending, the trillions needed each year for the green economy, the remilitarization of the world and the restructuring of global trade—all are inflationary," he wrote in a 61-page letter, per the Wall Street Journal.

• He flagged the potential for geopolitical events—the war in Ukraine and the Israel-Hamas war among them—and US political polarization to create an environment that "may very well be creating risks that could eclipse anything since World War II."
• Those issues make Dimon less optimistic that the US economy will achieve a "soft landing," which he defined as modest growth along with declining inflation and interest rates, reports the AP. While he says the investors are pricing in a "70% to 80%" chance of a soft landing, Dimon thinks the chances of such an outcome are "a lot lower" than that.
• Some context from the Journal: "Dimon's outlook on the economy has been cautious for years. He warned in 2022 that a 'hurricane' was about to hit the US economy as interest rates were rising. He has recently walked back some of his gloomiest statements."
• The AP has more from Dimon's letter here, including his thoughts on AI and the company's DEI initiatives.

(More Jamie Dimon stories.)