Wall Street is concerned that the Federal Reserve (Fed) could drag down the U.S. economy if it continues to raise interest rates.
[Financial Channel/Comprehensive Report] Under the pressure of the Russian-Ukrainian war and global inflation, many economic data show that the global economy is weakening, and Wall Street bank CEOs are increasingly pessimistic about the U.S. economic outlook. The Federal Reserve (Fed) may be raising rates too far, and they are preparing for a potential or already-occurring recession.
"ABC News" reported that on Friday (14th), six Wall Street banks announced quarterly results, including JPMorgan Chase, Citigroup and Bank of America.
In a conference call with investors, the banks said that while consumer spending is healthy and customer delinquency rates are low, high inflation, high rate hikes and a rapidly slowing housing market are making it more difficult for banks to borrow.
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"Inflation is casting a huge cloud on the economic outlook for these banks," said Peter Torrente, U.S. head of the Big Four accounting firm KPMG.
Bank of America chief executive Andy Cecere said: "We are aware of the pressure points that are forming in multiple areas of the economy, and these pressure points may eventually converge into a larger pressure." "If there is a recession when confidence levels fall, I will not Surprisingly, this could lead to lower spending and business investment."
Wells Fargo CEO Charlie Scharf also sees broader economic weakness ahead, with increased customer delinquencies and credit losses.
The U.S. consumer price index (CPI) increased by 8.2% in September, higher than the expected 8.1%, and only slightly lower than the 8.3% in August, while the core CPI, which excludes energy and food prices, rose instead of falling, from August's 8.3%. 6.3% rose further to 6.6%, the highest since 1982, and the market does not expect the Fed to stop raising interest rates, which is the biggest worry for economists and Wall Street executives.
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