Over the last week, the biggest banks in the world released their profits, and everyone was watching the CEOs of the Wall Street behemoths for clues on how the markets would handle the present economic climate.
Many predict a decline, albeit a slight one, as consumers overall continue to be in good health and deal with the possibility of inflation being low.
Here are some key bank CEOs’ comments on the US economy from this season’s earnings calls.
1. JPMorgan CEO Jamie Dimon
The Wall Street vet warned investors of looming “storm clouds” ahead.
“The US economy continues to be on generally healthy footings. Consumers are still spending and have strong balance sheets, and businesses are in good shape,” Dimon said. “However, the storm clouds that we have been monitoring for the past year remain on the horizon, and the banking industry turmoil adds to these risks.”
2. Bank of America CEO Brian Moynihan
During an earnings call, Moynihan warned of a US recession but said inflation has showed signs of cooling.
“Everything points to a relatively mild recession given the amount of stimulus that was paid to people and the money they have left over,” he said. “At the end of the day, we don’t see the activity on a consumer side slowing at a pace that would indicate that, but we see commercial customers are being more careful.”
He added: “The fact that unemployment is still 3.5% [shows] full employment-plus. And then the wage growth is slowing and tipping over, so the signs of inflation are tipping down. And it’s still there but that translates into relatively good activity. So we see a slight recession.”
3. Citigroup CEO Jane Fraser
She also predicted the country is bound to slip into a mild recession in 2023, but the slew of bank failures have amplified these concerns.
“We are in a strong position to navigate whatever environment we face, which is particularly relevant given the degree of uncertainty today,” Fraser said on an investor call this week. “We expect the recent events to be disinflationary and credit to contract.”
She added: “We believe it is now more likely that the US will enter into a shallow recession later this year.”
4. Morgan Stanley CEO James Gorman
Gorman told analysts that the US economy is in much better shape than during the Great Financial Crisis. He allayed fears of a full-blown banking crisis, addressing the turmoil sparked by collapse of specialist banks like SVB last month.
“We have had, and may still have, a crisis among some banks. I believe strong regulatory intervention, on both sides of the Atlantic, led to the cauterization of the damage,” Gorman said. “I consider the current issues as not remotely comparable to 2008.”
5. State Street CEO Ron O’Hanley
In an earnings statement, O’Hanley noted how macro conditions have shifted the bank’s performance over the past quarter, remarking on the efforts institutions have made in order to “stabilize the US banking system.”
“Our first-quarter results reflect the resiliency of our business model, not withstanding continued interest rate increases and subsequent significant market movements, volatility and disruption within other parts of the banking industry,” he told investors.
