JPMorgan, Morgan Stanley CEOs share their 2023 economic outlook

• The world’s largest banks reported earnings over the past week.
• JPMorgan’s Jamie Dimon warned of looming “storm clouds” ahead for the US economy.
• “I consider the current [bank] issues as not remotely comparable to 2008,” Morgan Stanley’s James Gorman said.

The world’s largest banks reported earnings over the past week, and all eyes were on CEOs of the Wall Street giants for cues on how markets will weather current economic conditions.

Several see a downturn, albeit a mild one, as consumers overall remain in strong shape and face the prospect of inflation continuing to cool.

Here is what some top bank CEOs are saying about the US economy during their earnings calls this season.

1. JPMorgan CEO Jamie Dimon

The Wall Street vet warned investors of looming “storm clouds” ahead.

“The US economy continues to be on generally healthy footings. Consumers are still spending and have strong balance sheets, and businesses are in good shape,” Dimon said. “However, the storm clouds that we have been monitoring for the past year remain on the horizon, and the banking industry turmoil adds to these risks.”

2. Bank of America CEO Brian Moynihan

During an earnings call, Moynihan warned of a US recession but said inflation has showed signs of cooling.

“Everything points to a relatively mild recession given the amount of stimulus that was paid to people and the money they have left over,” he said. “At the end of the day, we don’t see the activity on a consumer side slowing at a pace that would indicate that, but we see commercial customers are being more careful.”

He added: “The fact that unemployment is still 3.5% [shows] full employment-plus. And then the wage growth is slowing and tipping over, so the signs of inflation are tipping down. And it’s still there but that translates into relatively good activity. So we see a slight recession.”

3. Citigroup CEO Jane Fraser

She also predicted the country is bound to slip into a mild recession in 2023, but the slew of bank failures have amplified these concerns.

“We are in a strong position to navigate whatever environment we face, which is particularly relevant given the degree of uncertainty today,” Fraser said on an investor call this week. “We expect the recent events to be disinflationary and credit to contract.”

She added: “We believe it is now more likely that the US will enter into a shallow recession later this year.”

4. Morgan Stanley CEO James Gorman

Gorman told analysts that the US economy is in much better shape than during the Great Financial Crisis. He allayed fears of a full-blown banking crisis, addressing the turmoil sparked by collapse of specialist banks like SVB last month.

“We have had, and may still have, a crisis among some banks. I believe strong regulatory intervention, on both sides of the Atlantic, led to the cauterization of the damage,” Gorman said. “I consider the current issues as not remotely comparable to 2008.”

5. State Street CEO Ron O’Hanley

In an earnings statement, O’Hanley noted how macro conditions have shifted the bank’s performance over the past quarter, remarking on the efforts institutions have made in order to “stabilize the US banking system.”

“Our first-quarter results reflect the resiliency of our business model, not withstanding continued interest rate increases and subsequent significant market movements, volatility and disruption within other parts of the banking industry,” he told investors.

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