Citigroup is seeing countries around the world roll into recessionary environments, with the U.S. economy on track to follow them in the second half of next year, Chief Executive Jane Fraser said.
The New York-based bank is worried in particular about Europe, which Fraser said has already entered a recession. It may take years for countries across the region to recover from the energy crisis they were plunged into following Russia's invasion of Ukraine earlier this year, she said.
"Obviously, things are softening," in the U.S. as well, Fraser said Wednesday during the second day of an investor conference in New York hosted by Goldman Sachs. Still, "when you go to the States, compared to elsewhere in the world, it is good to be American."
One by one, U.S. bank executives said this week that, for now, the American consumer remains healthy, though many warned the economy is approaching a slowdown.
The comments come after the Federal Reserve has spent months aggressively raising interest rates in an effort to tamp down historically high inflation, similar to moves made by central banks around the world.
JPMorgan Chase, the largest U.S. lender, warned that the country's unemployment rate will likely rise in 2023 before peaking at 5% the following year. That may spark a "shallow and short-lived recession" at the end of next year, Marianne Lake, co-CEO of JPMorgan's consumer and community banking businesses, said Tuesday at the conference.
"The consumer is still healthy, still spending money, still sits on cash balances well above pre-COVID levels, but I believe we're at a bit of an inflection point," U.S. Bancorp Chief Executive Andy Cecere said at the conference Wednesday. "Things are good today. However, that cash balance and that cushion, so to speak, is going to start to dissipate, and I think that will create a change in behaviors and a slowdown."
At Bank of America, CEO Brian Moynihan said spending on his firm's cards rose just 5% in November, a lower rate compared with previous periods. Consumer deposit balances are starting to come down as well, and his bank's base-case assumption is for a mild recession in 2023, he added.
Goldman CEO David Solomon warned of "bumpy times ahead" in a Bloomberg Television interview from the conference Tuesday. He said the uncertain outlook is prompting the firm to be more cautious with its financial resources — and could lead to some "pruning" in certain areas. The U.S. could see a recession in 2023, Solomon added.
It's not just the U.S. looking to rein in inflation: Bank of Canada
Also at the Goldman conference, Fraser said Citigroup's
— With assistance from Sridhar Natarajan and Katherine Doherty.
