Top US banker: Inflation, political polarization, wars create risks not seen since WWII

The US’s most influential banker, JPMorgan Chase CEO Jamie Dimon, tells investors that he continues to expect the US economy to be resilient and grow this year. But he worries geopolitical events including the war in Ukraine and the Israel-Hamas war, as well as US political polarization, might be creating an environment that “may very well be creating risks that could eclipse anything since World War II.”

The comments come in an annual shareholder letter from Dimon, who often uses the letter to weigh in broad topics like politics, regulation and global events and what it might mean to JPMorgan Chase, as well as the broader economy.

“America’s global leadership role is being challenged outside by other nations and inside by our polarized electorate,” Dimon said. “We need to find ways to put aside our differences and work in partnership with other Western nations in the name of democracy. During this time of great crises, uniting to protect our essential freedoms, including free enterprise, is paramount.”

Dimon has particular concerns with continued large amounts of deficit spending by the US government and other countries, as well as the need for countries such as the US to remilitarize and continue to build out green infrastructure, all of which will likely keep inflation higher than investors expect.

Because of these issues, Dimon says he is less optimistic that the US economy will achieve a “soft landing,” which he defines as modest growth along with declining inflation and interest rates, compared to the broader market. While he says the investors are pricing in a “70% to 80%” chance of a soft landing, Dimon thinks the chances of such an ideal outcome are “a lot less” than that. “These significant and somewhat unprecedented forces cause us to remain cautious,” he says.