Fixing the "fiscal cliff" and the country's long-term fiscal problems could lead to an economic boom, JPMorgan Chase CEO Jamie Dimon told CNBC's "Closing Bell" on Friday.
"The foundation of business is pretty strong, housing looks like it is turning, household formation is going up, and consumers are still spending," the JPMorgan (JPM) chief said. "If we solve the short-term 'fiscal cliff' and the longer-run fiscal issues, the economy can boom." (Read More: Jamie Dimon: CEOs Already Cutting Back Due to 'Fiscal Cliff'.)
Everything about the housing market is flashing green, Dimon said, noting strong household formation, inventory levels, affordability and rebounding home prices in some of the worst hit markets. Housing could become a strong economic driver and job creator, he added.
Dimon said the U.S. is the greatest economic engine ever built. "It's growing slowly, it's waiting to be ignited," he said, adding that if government and business collaborate there's a greater chance of igniting that engine.
The immediate problem holding the economy back is the fiscal cliff, which is the looming tax increases and spending cuts that kick in at the end of the year.
Some estimates suggest the economy would drop by 3 or 4 percent if the U.S. goes off the cliff but Dimon said the effects could hit before the end of the year and could be much worse.
"That's why it's important to fix it as soon as we can," Dimon said.
He is also looking for a solution to the country's long-term fiscal problems, noting that business leaders want a solution and aren't "religious about all the issues of taxes and spending."
Europe must also deal with its own debt crisis. Dimon said the region needs to make sovereign debt good, stop the potential for bank runs in Italy and Spain and rewrite the rules governing the region's fiscal affairs.
"In Europe, they have the will - it's hard to figure out the way," Dimon said. "In the U.S., we have the way - something around a Simpson-Bowles - but we don't have the will."
Fiscal Cliff: Complete Coverage
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