The Two Oracles, Jamie Dimon and Warren Buffet, are very concerned about where we’re headed

Sources: CNN and MoneyWise

May 22, 2025

JPMorgan Chase CEO Jamie Dimon has not dismissed the possibility of stagflation in the United States. He points to risks from significant government budget deficits and disruptions in global trade caused by U.S. tariffs. Meanwhile, Warren Buffett warns that tariffs are akin to America boasting to the world, cautioning against using trade as a weapon, especially with eight nations possessing nuclear weapons.

Stagflation describes a troubling mix of economic stagnation or recession coupled with rising inflation. This scenario poses a significant challenge for central banks: increasing interest rates to combat inflation could hinder growth and raise unemployment, while lowering rates to stimulate the economy might exacerbate inflation.

“There’s a chance that we’ll have stagflation (in the US),” Dimon told Bloomberg Television in Shanghai. He clarified that he was not making a prediction, but emphasized the need to be prepared for such an outcome.

Dimon noted that global fiscal deficits, increased militarization, and changes in trade are all inflationary factors, not solely American issues.

At a recent Global Markets Conference, Dimon expressed concern that higher tariffs could lead to a recession. His comments come as President Donald Trump pushes for a significant tax cut that the Congressional Budget Office estimates could add trillions to the federal deficit over the years.

On Monday, Dimon indicated that he believes the likelihood of stagflation is about double what others have estimated. He warned that the full impact of Trump’s tariffs has yet to be felt and criticized the market's “extraordinary complacency” regarding these risks.

The U.S. Federal Reserve has maintained its benchmark interest rate since January, navigating uncertainty stemming from Trump’s unpredictable trade policies. Trump has criticized the Fed for not lowering rates.

In his Thursday interview at JPMorgan’s China Summit, Dimon disagreed with the notion that the Fed was in a “sweet spot.” He acknowledged the economy's recent performance but cautioned that past successes do not predict future outcomes.

Dimon commended the Fed for its cautious approach in evaluating how various inflationary pressures, including the federal deficit, will impact the economy before deciding on interest rate changes.

Last week, Moody’s downgraded America’s credit rating due to its rising government debt.

Buffett's Concerns

While Trump’s trade war and growing protectionism raise fears of a zero-sum global economy, investor Warren Buffett remains wary of this trend.

"Trade can be an act of war," Buffett, the 94-year-old CEO of Berkshire Hathaway, stated at a recent shareholder meeting. He emphasized that the U.S. should prioritize global trade for mutual prosperity.

Buffett criticized the mindset of boasting about national success, stating it’s a “big mistake” to foster an environment where some countries celebrate at the expense of others. He noted the danger of engaging in a trade war, particularly with nations that possess nuclear weapons.

Buffett believes that balanced trade benefits everyone and that a prosperous global economy ultimately enhances U.S. safety. He remarked, “The more prosperous the rest of the world becomes, it won't be at our expense.”