Jamie Dimon mentioned “America” more than 80 times in his 2026 annual letter to shareholders, laying out goals for improving the country’s infrastructure, military, and the American Dream. He also mentioned one word once that could jeopardize those very goals: “stagflation.”

The JPMorgan Chase CEO warned of the economic dangers of protracted foreign conflicts, including in Iran and Russia’s invasion of Ukraine. He thinks they could lead to a recession, which would reduce inflation. But he also fears a stagflationary outcome, combining recessionary elements with higher inflation.

“There are some scenarios that would result in a recession, which generally reduces inflation, and other scenarios that would lead to a recession with inflation (stagflation—where inflationary forces overcome deflationary ones),” Dimon wrote.

“The skunk at the party—and it could happen in 2026—would be inflation slowly going up, as opposed to slowly going down. This alone could cause interest rates to rise and asset prices to drop.”

The CEO is not alone in his fears. Several top economists have warned of stagflation—the toxic economic cocktail mixing inflation with stagnating growth and high unemployment—since the start of the Iran war in late February, especially if it stretches on for several months.

Economic ‘earthquakes and volcanoes’

However, there’s a vocal group of economists who think fears of stagflation are unwarranted. While about one-fifth of the world’s oil supply passes through the Strait of Hormuz, stagflation isn’t likely to come to fruition, said Preston Caldwell, chief U.S. economist at financial services firm Morningstar, calling comparisons to the 1970s “misplaced.”

He pointed to the U.S.’s greater structural resilience and reduced dependence on petroleum products since the 1970s, when stagflation first emerged.

“Spending on petroleum products as a share of total personal consumption was around 3.3% in 2025, less than one-half of its 8.3% average in the 1970s,” Caldwell explained.

Still, even while doubting stagflation, he predicted the personal consumption expenditures index will hit an annual rate of 3.6%, up a percentage point from his initial forecast earlier this year. The Organization for Economic Cooperation and Development warned U.S. inflation could reach 4.2%.

The latest inflation report from the Bureau of Labor Statistics showed that the consumer price index held steady in February at an annual rate of 2.4%. However, that number doesn’t reflect price changes since the start of the Iran war.

Despite some pointed pessimism, Dimon also laid out several bright spots buoying the economy, including fiscal stimulus from the One Big Beautiful Bill Act; AI-driven capital spending; deregulatory policies; and the Federal Reserve’s purchases of securities.

But aside from the war in Iran and other geopolitical conflicts, the CEO remains wary of other headwinds, including global deficits, high asset prices, and private credit.

“I think some of the larger risks are much like tectonic plates,” he wrote, “always moving and periodically causing earthquakes and volcanoes when they crash into each other.”