JPMorgan Chase (JPM) CEO Jamie Dimon says a resilient US economy is still threatened by the Iran war, a looming credit cycle, ongoing trade negotiations, and other uncertainties.
“While the economy may be less fragile than in the past, this alone does not mean there is no ‘tipping point’ — it just may mean it could take more straws on the camel’s back to get there,” he said in a 48-page shareholder letter published on Monday.
Dimon said consumers and businesses are still healthy. But he said the Iran war means “we additionally face the potential for significant ongoing oil and commodity price shocks, along with the reshaping of global supply chains, which may lead to stickier inflation and ultimately higher interest rates than markets currently expect.”
“The skunk at the party — and it could happen in 2026 — would be inflation slowly going up, as opposed to slowly going down,” Dimon said, noting that the combination of rapidly increasing oil prices and inflation is viewed as among the main causes of deep recessions in 1974 and 1982.
Ongoing trade negotiations “exacerbate the tense geopolitical issues,” and historically high asset prices “create additional risk if anything goes wrong,” he added.
Dimon, who turned 70 last month, is the longest-serving CEO of a major US bank. He’s credited as one of Wall Street’s most prudent risk managers, for steering his bank through the worst of the financial crisis while simultaneously scooping up other hobbled players. For years, he has used his annual shareholder letter to sound off on a wide range of topics beyond banking.
In recent weeks, the Middle East conflict has dominated US markets, with energy prices spiking as Iran chokes off oil supply from the Strait of Hormuz.
Already, Dimon has delivered one of the most outspoken viewpoints from Wall Street. Last week, he said in a Fox interview that it’s essential the US doesn’t exit the war in Iran until it’s “successfully completed.”
“Time will tell whether the current war in Iran achieves our short-term and long-term objectives in the region, and at what cost,” Dimon wrote in the letter. “We should not turn a blind eye to the role the current regime in Iran has played in fostering terrorism and killing thousands of people, including Americans and many of its own citizens, over many years” or the country’s nuclear threat.
Domestically, losses in private credit and other forms of leveraged lending will be higher than expected due to weakening credit standards, Dimon warned. He said actual losses are “already a little higher than they should be, relative to the environment.”
However, he echoed Federal Reserve Chairman Jerome Powell’s take that the $1.8 trillion private credit market doesn’t present a systemic risk.
A growing string of private fund giants, such as Apollo (APO), BlackRock (BLK), Morgan Stanley (MS), and others, have recently imposed redemption limits on certain funds as a surge of investors look to exit. Blue Owl Capital (OWL) reported a record number of redemptions in two of its funds on Thursday. (Disclosure: Yahoo is a portfolio company of funds managed by affiliates of Apollo Global Management.)
Investors have become increasingly anxious about what rapid advancements in artificial intelligence might do to these companies’ significant loan portfolios to software providers.
At the same time, the Trump administration is opening the door to include private credit and other alternative assets into 401(k) plans, potentially widening the risk to everyday investors. Last week, the US Labor Department issued its proposal to facilitate this change; those rules are now in a two-month comment period before being finalized.
Dimon commented that “anything that gets sold to retail investors as opposed to institutional investors requires greater transparency, higher standards and fewer potential conflicts.”
Meanwhile, increasing fiscal stimulus from the One Big Beautiful Bill, the Trump administration’s deregulatory agenda, and Big Tech’s AI-driven capital spending are the US economy’s greatest tailwinds, per Dimon.
AI will bring dramatic benefits over the long term, including a reduced workweek in industrialized countries and longer lifespans. In the medium term, it “will definitely eliminate some jobs, while it enhances others,” Dimon said.
But there’s a possibility that AI adoption moves faster than the workforce can adapt, leading to steep unemployment. The CEO advocated for businesses and the government to find ways to incentivize “retraining, income assistance, reskilling, early retirement and relocation” for displaced workers.
Dimon also acknowledged that AI will bring unpredictable “second and third-order effects” — the way agriculture enabled the creation of cities, cars brought about the development of suburbs, and the internet ushered in social media.
“We should be monitoring for this kind of transformation, too,” he told shareholders.
David Hollerith covers the financial sector, ranging from the country’s biggest banks to regional lenders, private equity firms, and the cryptocurrency space.
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