Author of How to Prep When You’re Broke and Bloom Where You’re Planted online course
In an interview with Bloomberg in Shanghai, Jamie Dimon, the head honcho at JP Morgan Chase, sounded the alarm about looming stagflation in the United States.The NYPost reports:
JPMorgan boss Jamie Dimon on Thursday said the US economy continues to face the risk of stagflation due to ballooning deficits, geopolitical tensions and price pressures from President Trump’s trade war.
“There is a chance that with these things you’ll have stagflation,” Dimon said in an interview with Bloomberg while attending JPMorgan’s Global China Summit in Shanghai.
“I am not saying it is going to happen, but we have to be prepared for something like that.”
Stagflation is considered by economists to be actually worse than a recession. (You can see the whole interview with Dimon below.)
But what is stagflation?
Simply put, stagflation is when prices go up but incomes stay the same and employment decreases. Folks are hit from both sides – they have to pay more for everyday goods while their paychecks remain the same, or even worse, they lose their jobs. It’s a diabolical circle that makes it tough to get by.
Here’s the fancy definition from Investopedia:
Stagflation is an economic condition characterized by slowing economic growth, high unemployment, and rising prices (inflation) simultaneously.
And here’s more information from the same source.
First named in the 1960s, stagflation shattered long-held economic theories when it emerged most dramatically during the 1970s oil crisis.1 Decades later, in April 2025, Federal Reserve Chair Jerome Powell warned that the Trump administration’s new tariffs were “significantly larger than expected” with likely effects that included “higher inflation and slower growth,” the classic precursors to stagflation. With companies already planning layoffs, Americans faced the prospect of an economic challenge that generations of policymakers had largely avoided.
When this happens, it’s difficult to fix with policies. The policies that would increase employment and wages (increasing government spending) make inflation worse. The policies that would decrease inflation (increasing interest rates) makes unemployment worse.
Therein lies the problem. While it stabilizes many things, President Trump’s “Big Beautiful Bill” increases government spending, adds to the deficit, which in turn, has affected America’s top tier credit rating with Moody’s.
It’s disappointing to me that Congress has not taken action on all the waste pointed out by Elon Musk while they appear willing to pass a bill that will increase our deficit instead. Honestly, the biggest voice of reason in Congress is Thomas Massie, although President Trump is certainly not a fan.
The Misery Index
One metric for measuring the effects of the economy on Americans is called “The Misery Index.” While mercifully, it’s down from the misery inflicted by the Biden administration, it’s still not great. It was hovering around 5% during President Trump’s first administration, until Covid nearly destroyed the American economy. (This was down from a high of over 12% during the Obama administration.) Since Covid, it’s gone up as high as 15%.
Here’s a recent-historic look at the misery index by year and by president.
If we increase our deficit with this bill, the misery index may skyrocket.
How do we manage stagflation?
I’ve been talking a lot lately about the economy, and for good reason. Things are extremely difficult for many people right now, including many of us in this community. Even though China and the US have come to a temporary agreement on the sky-high tariffs that were pitched by the President, we’re not out of the woods. The existing 30% tariffs are still making consumer prices considerably higher.
I wrote this article about how to survive the trade war, and although we aren’t facing (today) 140% tariffs on goods from China, it’s still solid advice.
If you have savings or are invested in the market, now is a very important time to consider moving that money into the safe haven that gold provides. Here is the company I recommend. You can set up a strategy call, absolutely free, with no worries that you’re going to face a high-pressure sales pitch. Even if you never make the switch, the personalized education is priceless.
Meanwhile, in the everyday, your best friends through this difficult time are frugality, emergency funds, and self-reliance. This book has my very best advice for prepping if your money is already tight.
The interview with Jamie Dimon
What do you expect?
Do you foresee stagflation? Do you think more economic trouble is on the horizon? What steps are you taking to prepare for it?
Let’s discuss it in the comments section.
