Citi expects a recession as a result of several macroeconomic factors, including persistent inflation in services and rising debt, CEO Jane Fraser said today, December 6, during testimony before a Senate Banking Committee hearing.
“Although we don’t see a drastic downturn on the horizon, we do expect a recession as the result of a range of macroeconomic factors,” Fraser said in her opening remarks. “This includes persistent inflation in services, rising debt, a slowdown in global growth and two major conflicts in Europe and the Middle East.”
Fraser, along with seven other banking and financial services executives including JP Morgan CEO Jamie Dimon and Bank of America CEO Brian Moynihan, were called to testify today during the Banking Committee's annual oversight of Wall Street firms hearing.
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Neither Dimon nor Moynihan commented on a recession in their opening remarks at the hearing. However, Dimon echoed similar concerns as Fraser when he spoke at the 2023 New York Times DealBook Summit last week.
“A lot of things out there are dangerous and inflationary,” Dimon said. “Be prepared. Interest rates may go up and that might lead to recession.”
Moynihan only mentioned that the economy is volatile and uncertain as he delivered opening remarks at the hearing.
A slowdown more likely?
Kiplinger staff economist David Payne reported last week that an economic slowdown is expected in the first half of 2024, but not a recession. “Despite the slowdown, 2024 growth should still be a moderate 1.7%.”
He added that the Federal Reserve is unlikely to raise interest rates anymore because of the expected slowdown. However, he said, the Fed "is also not likely to cut rates anytime soon because it is still determined to combat inflation. Inflation is on a downtrend, but the Fed wants to make sure it doesn’t get stuck at a level higher than 2%.”
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