U.S. banking industry prepares for economic recession, a large number of executives warn: the business environment in the United States has become more severe
Overseas Network, January 11 (Xinhua) According to a Archyde.com report on the 9th, the US banking industry is saving funds to prepare for the country’s economic slowdown. A slew of U.S. banking executives have recently warned that the U.S. business environment has become tougher, prompting companies to cut pay or lay off workers.
U.S. banking giants JP Morgan Chase, Bank of America, Citigroup and Wells Fargo will announce their results for the fourth quarter of 2022 this week, and the profits of major banks may decline in the fourth quarter. International data provider Refinitiv estimates that Morgan Stanley, Goldman Sachs and other six largest U.S. banks are expected to accumulate a total of $5.7 billion in reserves to deal with non-performing loans, an increase from $2.37 billion in the same period last year. more than double. “With most U.S. economists forecasting a recession or a sharp slowdown this year, banks are likely to consider a tougher economic outlook,” Morgan Stanley analysts said in a note.
Currently, the Federal Reserve is aggressively raising interest rates in an effort to keep inflation below its highest level in decades. Higher prices and higher borrowing costs prompt consumers and businesses to rein in spending, and because banks act as middlemen in the economy, their profits fall when economic activity slows. Therefore, investors and analysts always pay attention to the remarks of bank bosses as an important indicator of the US economic outlook.
A slew of U.S. bank executives have warned in recent weeks of a tougher business environment, prompting companies to cut pay or lay off workers. According to reports, Goldman Sachs will start cutting thousands of jobs starting Wednesday (January 11). Morgan Stanley and Citigroup , among others, have also cut jobs after bank investment profits plummeted.
Previously, the results of these big U.S. banks fell sharply in 2022 as the Federal Reserve’s aggressive interest rate hikes continued to roil the market. Data show that the fourth quarter of these investment banks business income fell by more than 50% compared with the same period last year.