Jul 17, 2023 - Economy

Bank CEOs on soft landing prospects

Photo: Michael Nagle/Bloomberg via Getty Images

Big bank CEOs say the U.S. economy is chugging along. They are also optimistic the nation might just avoid a recession.

Why it matters: That near-universal macroeconomic sentiment comes as corporate earnings season gets underway.

What they're saying: "In the U.S., the tight labor market keeps pushing the timing of this elusive recession later into this year or 2024, with the robust demand for services providing a backstop for the economy," Citi CEO Jane Fraser told investors.

  • On the health of the U.S. consumer, she added the bank is "seeing a more cautious consumer, but not necessarily a recessionary one."

That is reflected in private sector consumer spending figures. Card data from Bank of America shows that spending was "down but not out" — declining 0.2% in June from the same period a year ago, in line with the rate in May.

  • Official government retail sales data for June is out Tuesday at 8:30am ET.

What to watch: JPMorgan CEO Jamie Dimon said "the consumer is in good shape. They're spending down their excess cash. That's all tailwinds."

  • If there is a recession, the consumer is "going in with rather good conditions, low borrowings, good house price value still."
  • But Dimon warned of severe economic risks, including the war in Ukraine, the Fed's quantitative tightening and the "unprecedented fiscal needs of governments."

The bottom line: Wells Fargo CEO Charlie Scharf said the economy "continues to perform better than many expected."

  • "Although there will likely be continued economic slowing and uncertainty remains, it is quite possible the range of scenarios will narrow over the next few quarters," Scharf said.
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