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Friday, February 3, 2023

US banks warn of recession risks and inflation hurting consumption

Top executives said Tuesday that the biggest US banks are preparing for a worsening economy next year as inflation threatens consumer demand.

Jamie Dimon, chief executive of JPMorgan Chase & Co. cnbc Consumers and businesses are currently in good shape, which may not last much longer as the economy is slowing and inflation is eroding consumers’ purchasing power.

“Those things can derail the economy and cause this mild to severe recession that people are worried about,” he said.

Consumers have $1.5 trillion in surplus savings from pandemic stimulus programs, but they could run out anytime in the middle of next year, he said cnbc,

Dimon also said the Federal Reserve could hold on for three to six months after raising interest rates to 5%, but that “may not be enough” to prevent high inflation.

The US central bank raised rates by 75 basis points to 3.75%-4% last month for the fourth consecutive meeting, but also indicated it expected a small increase in borrowing costs at the next meeting.

Bank of America Chief Executive Brian Moynihan told investors at a Goldman Sachs financial conference that Bank of America’s research shows “negative growth” in the first half of 2023, but contraction will be “mild.”

“Economic growth is slowing,” said David Solomon, chief executive of Goldman Sachs. “When I talk to my clients, they seem extremely alert.”

For Banks, the job market remains “surprisingly tight” and the competition for talent is “as tough as ever”.

World Nation News Desk
World Nation News Deskhttps://worldnationnews.com/
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