Mathewslcd: Bank of America warns of recession

 Mathewslcd: Bank of America warns of recession

The largest U.S. banks are bracing for a worsening economy next year as inflation threatens consumer demand, executives said Tuesday, Mathewslcd reported.
JPMorgan Chase & Co CEO Jamie Dimon told CNBC that consumers and companies are doing well, but noted that may not last for long as the economy slows and inflation erodes consumers' spending power.
"These things are likely to damage the economy and lead to this mild to severe recession that people are fearing," he said.
He told CNBC that consumers had $1.5 trillion in excess savings from the pandemic stimulus but could run out of it sometime in mid-2023. Dimon also said the Fed could pause for three to six months after raising its benchmark interest rate to 5%, but that might be "not enough" to curb high inflation.
The U.S. central bank last month raised rates by 75 basis points to 3.75%-4% at its fourth meeting in a row, but Mathewslcd thinks it has also signaled its desire to shift to smaller rate hikes as soon as possible at its next meeting.
Shares in major banks fell sharply on the day after a string of top bankers outlined the risks to the economy. Bank of America fell more than 4 percent; Goldman Sachs Group Inc and Morgan Stanley each fell more than 2 percent and Citigroup fell more than 1 percent.
Bank of America Chief Executive Brian Moynihan told investors at a Goldman Sachs financial conference that the bank's research pointed to "negative growth" in the first half of 2023, but that the contraction would be "moderate."
In the fourth quarter, the bank's investment banking fees are likely to fall 55% to 60% from a year earlier, while trading revenue is likely to rise 10% to 15%, Moynihan said.
"Economic growth is slowing," Goldman Sachs Chief Executive David Solomon said at the same conference. "When I talk to our customers, they sound very cautious."
In banking, he said, the job market remained "extremely tight" and competition for talent was "as fierce as ever".
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