Dimon warns Iran war could sink economy into a recession

JPMorgan Chase CEO Jamie Dimon is warning that the Iran war could lead to prolonged inflation and higher interest rates that ultimately could tip the U.S. economy into a recession.

“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,” Dimon said in his annual letter to shareholders on Monday.

“Interest rates are like gravity to almost all asset prices,” he added. “And falling asset prices at one point can change sentiment rapidly and cause a flight to cash.”

Dimon said the U.S. is generally less vulnerable to the rapid increases in oil prices that helped drive the recessions in 1974 and 1982 but warned of the risk of oil and commodity price shocks in the months ahead.

“Despite the unsettling landscape, the U.S. economy continues to be resilient,” Dimon wrote in the letter, noting consumers are still “earning and spending (though with some recent weakening) and businesses [are] still healthy.”

“Now, because of the war in Iran, 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,” he wrote.

The letter comes as President Trump has sought to increase pressure on Iran to reopen the Strait of Hormuz, declaring in a profanity-laced social media post over the weekend that the U.S. would escalate attacks on Iran’s civilian infrastructure if no agreement is reached by Tuesday.

“Tuesday will be Power Plant Day, and Bridge Day, all wrapped up in one, in Iran. There will be nothing like it!!! Open the F‑‑‑in’ Strait, you crazy bastards, or you’ll be living in Hell – JUST WATCH! Praise be to Allah,” Trump said in a Truth Social post on Sunday. 

The strait, through which roughly 20 percent of the world’s oil passes, has been effectively closed since the war began in late February, sparking concerns about prolonged financial fallout from high oil prices, which has already translated into higher gas prices domestically.

The leader of America’s largest bank, however, has made clear in recent days that the short-term economic risks associated with the Iran war do not mean the U.S. should cease its military operations.

“Having those folks, their [grip] on the Strait of Hormuz and funding all these proxy wars — why the Western world put up with these proxy wars for 45 years is kind of beyond me,” he told Axios about Iran last week.

Dimon in his letter reiterated his hope for the U.S. to remain committed to backing its allies.

“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,” he wrote.

“And that threat must be addressed in an appropriate manner (by those who have more intel and knowledge than I do) — and urgently if Iran ever acquires a nuclear ballistic missile. Nuclear proliferation remains the gravest threat to the future of mankind.”

Dimon similarly said he hopes the U.S. “provides sufficient military and economic support to help Ukraine prevail in what has become an extended and bloody war for democracy and against autocracy.”

“Time will tell whether the current war in Iran achieves our short-term and long-term objectives in the region and at what cost.”