Callum Jones in New York
3 min read
Jamie Dimon, the chief executive of JP Morgan, in April last year.</span><span>Photograph: Mike Segar/Reuters</span>" height="768" loading="eager" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///ywAAAAAAQABAAACAUwAOw==" width="960">
JP Morgan’s chief executive, Jamie Dimon, warned on Monday that investors were being too complacent as markets shook off news that the US has lost its last triple-A credit rating amid fresh concern over the federal government’s burgeoning debt pile.
Credit ratings agency Moody’s dealt a blow to Washington on Friday when it stripped the US of its top-notch rating, downgrading the world’s largest economy by one notch to AA1 and become becoming the last of the big three agencies to drop its triple-A rating for the US.
The announcement unnerved markets on Monday morning, but stock markets had recovered by the end of the day.
Related: Trump’s tax cut bill advances in rare weekend vote but right seeks more changes
Speaking at JP Morgan’s annual investor day meeting in New York, Dimon warned against complacency. “We have huge deficits; we have what I consider almost complacent central banks. You all think they can manage all this. I don’t think [they can],” he said.
Dimon said he saw an “extraordinary amount of complacency” and added that he believes the possibility of stagflation – a recession with rising prices – was far higher than investors believe.
Moody’s downgrade came as Donald Trump struggles to push his “big, beautiful” tax and spending bill through Congress, Moody’s said it expected the US budget deficit to keep rising.
“Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,” Moody’s said, announcing its downgrade. “We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration.”
Trump administration officials sought to play down the significance of the setback. “Moody’s is a lagging indicator,” Scott Bessent, the treasury secretary, told Meet the Press on NBC on Sunday.
The US president has himself remained silent on the downgrade. On Monday morning, he used posts on his Truth Social platform to criticize celebrities including Beyoncé and Bruce Springsteen, who castigated Trump on stage in Manchester last week, for supporting his political rivals.
During a rare Sunday night vote, House Republicans advanced Trump’s tax cut and spending package out of a key committee. It has been estimated that the proposed bill could add as much as $5tn to the US’s $36.2tn debt pile over the next decade.
Related: US credit rating downgrade could add to pressure on government debt
On Wall Street, the benchmark S&P 500 fell during early trading, before recovering its losses to close marginally higher, while the tech-focused Nasdaq also closed broadly flat after reversing early declines. The FTSE 100 rose 0.2% in London.
