J.P. Morgan Chairman and CEO Dimon warned that the US economy could experience a “hard landing.”

When asked about the prospects for a hard landing, Damon answered, “Will we actually see a hard landing? Of course, but how can anyone who knows history say that the chance of a hard landing is zero?”

Dimon said that the worst outcome for the US economy would be “stagflation,” that is, inflation continues to rise, but economic growth slows in the face of high unemployment. He said:

“I saw a range of outcomes, and the worst for all of us were stagflation, high interest rates, and recession. This means the company's profits will drop, but the world has survived, but I just think a hard landing is more likely than anyone else thought.”

However, he said that even if the economy falls into recession, “consumers are still in good shape.” Dimon mentioned the unemployment rate, which has been below 4% for about two years, adding that wages, housing prices, and stock prices have been rising.

Despite this, Dimon pointed out that the level of consumer confidence is very low. “This seems to be mainly due to inflation and additional savings due to the COVID-19 pandemic, but I think this is normal; it's not a bad situation.”

The minutes of the US Federal Reserve's May meeting released on Thursday showed that Fed policymakers are increasingly concerned about inflation. FOMC members said they lack confidence in easing monetary policy and cutting interest rates.

Regarding the federal funds rate, Dimon said that interest rates are still likely to rise “slightly”. “I think inflation is more difficult than people think, and the possibility of this situation (rate hike) is higher than others think, mainly because huge fiscal and monetary stimulus plans still exist in the economic system, which may still boost some liquidity.”

On the question of whether the world is ready for higher inflation, Dimon said “not necessarily.”

When asked about the prospects and timing of interest rate cuts, Dimon said that although market expectations are “pretty good,” they aren't always right. “The world initially thought inflation would stay at 2%. Then they say they want to go up to 6%, then they say they want to go up to 4%, and they're wrong almost every time, so why do they think they're right now?”

He said that J.P. Morgan uses implicit curves to estimate interest rates, adding:

“I know this will go wrong. You can look back at any economic inflection point in the past. At the time, people thought this would happen, but two years later they made a big mistake.”