Pak Sahafat – Executive directors of the largest American banks warn that with the decline in stock value and the threat of a decrease in consumer demand due to high inflation, the deterioration of the economic situation and recession is on the way.
According to Pak Sahafat News Agency’s report on Wednesday, Reuters news agency wrote: Jamie Diman, executive director and chairman of the board of directors of JPMorgan Chase, the largest American bank, told CNBC that the current state of the economy will not be sustainable due to the decline in economic growth and the impact of inflation on the purchasing power of consumers.
He said: These issues may well derail the economy and make the recession harder and become what people are worried about.
According to Diman, consumers now have $1.5 trillion in excess savings from pandemic-era stimulus programs, but that resource could run out by mid-2023. Also, after the central bank increases the interest rate to 5%, it may wait three to six months, but this solution may not be enough to curb high inflation.
The U.S. central bank raised interest rates by 75 basis points to a range of 3.75% to 4% at its fourth consecutive meeting last month, but also signaled that it hopes to make smaller rate hikes at its next meeting soon.
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Reuters also wrote: Shares of major US banks fell a day after major bankers warned about the economy. Shares of Bank of America, the American multinational banking and financial services company now known as the largest bank in the United States, fell more than 4 percent, Goldman Sachs and Mogran Stanley each fell more than 2 percent, and Citigroup fell more than 1 percent.
Brian Moynihan, CEO of Bank of America, told investors at the Goldman Sachs financial conference: The bank’s research shows “negative growth” in the first half of 2023, but this economic contraction will be “mild”.
Goldman Sachs CEO David Solomon also said that economic growth is slowing down. When we talk to our customers, they seem very cautious.
Some banks have also reduced their employees. A source familiar with Morgan Stanley’s corporate plans said on Tuesday that the bank has cut about two percent of its workforce.
The reduction in employment, which was first reported by the CNBC news network, will affect 1,600 jobs and will lead to layoffs at Goldman Sachs and Citigroup banks.
Elsewhere on Wall Street, BlackRock is not hiring except for key jobs, Chief Financial Officer Gary Shedlin said.
He said: We try to be a little more cautious.