- JPMorgan Chase CEO Jamie Dimon said the worst outcome for the US economy is stagflation.
- Speaking at a Tuesday conference, Dimon said he "wouldn't take it off the table."
- Inflation has shown signs of easing toward the Fed's 2% target, but risks remain, he said.
Even as inflation approaches the Federal Reserve's target, JPMorgan Chase CEO Jamie Dimon says stagflation is still a possibility.
"I would say the worst outcome is stagflation — recession, higher inflation," Dimon said.
"And by the way, I wouldn't take it off the table," he added, speaking at a conference from the Council of Institutional Investors on Tuesday, CNBC reported.
Recent inflation data has shown signs of easing toward the Federal Reserve's 2% target, with CPI cooling to 2.9% year-over-year in July — the first time the inflation rate has dipped below 3% in over three years.
But other factors could increasingly play a role in driving inflation back up, especially as the US economy remains fragile after a period of rising interest rates, Dimon said. He pointed to increased government budget deficits and spending on infrastructure.
"They're all inflationary, basically in the short run, the next couple of years," he said. "So, it's hard to look at [it] and say, 'Well, no, we're out of the woods.' I don't think so."
Dimon has previously expressed worries about a pending recession and sticky inflation. In August, he reiterated that he sees just a 35% to 40% chance of a "soft landing," but said that a recession wouldn't totally break the US economy.
"I'm fairly optimistic that if we have a mild recession, even a harder one, we will be OK," Dimon told CNBC last month. "Of course, I'm very sympathetic to people who lose their jobs. You don't want a hard landing."
Dimon said in particular that he's skeptical the Fed can reach maximum employment while targeting its 2% inflation goal.
Fed Chair Jerome Powell has emphasized that the central bank will weigh both inflation and labor market data ahead of cutting interest rates.
And with inflation data cooling, the Fed seems more focused on the labor market. A surprise hike in unemployment in July triggered worries of a recession and sparked a market rout, while the August jobs report came in line with expectations, bringing the unemployment rate down slightly to 4.2%.
The next CPI reading is due on Wednesday, a week before the Fed will make its decision on interest rates on September 18.