Jamie Dimon warns of deficit, trade risks to US economy

JPMorgan boss Jamie Dimon on Thursday said the US economy continues to face the risk of stagflation due to ballooning deficits, geopolitical tensions and price pressures from President Trump’s trade war.“There is a chance that with these things you’ll have stagflation,” Dimon said in an interview with Bloomberg while attending JPMorgan’s Global China Summit in Shanghai.“I am not saying it is going to happen, but we have to be prepared for something like that.”Stagflation is a term economists use to describe a toxic mix of slow growth, high inflation, and increasing unemployment.The nation’s top banker sounded the alarm shortly before the House passed a tax and spending bill, saying that the Trump-backed “big, beautiful bill” could help bring stability but is not conducive to deficit reduction.Dimon also backed the Federal Reserve for its wait-and-see approach before lowering interest rates — something that Trump has hounded the Fed Chair to do immediately.The new legislation, which now heads to the Senate, is estimated to add $3.8 trillion to the government’s $36.2 trillion in debt over the next decade.Credit rating firm Moody’s last week stripped the US government of its top-tier credit rating over the mounting national debt.“I think the deficit will be large and probably growing,” Dimon said at a closed-door event in Shanghai, according to audio obtained by Reuters.Dimon called for “responsibility” in spending, and warned governments could spend money while failing to spur growth.“It’s not just the United States, but governments have shown an amazing ability to spend your money not wisely, set rules and regulations to slow down growth,” he said.Dimon said efficient budgeting, planning and investing would drive growth and effectively help reduce the deficit.“But I don’t think you see it on the big, beautiful bill,” he added.Dimon did offer praise for the “certainty” brought by passing the legislation, a mix o...