Economy
Is the US economy weak? The heads of the leading U.S. banks are optimistic about the U.S. economy, but reasons for concern remain
Is the US economy weak? Top managers of major Wall Street banks in recent days gave a more optimistic assessment of the prospects of the U.S. economy compared with previous forecasts, writes the Financial Times.
In particular, bankers now see a higher probability that the Fed will be able to provide a so-called “soft landing,” that is, to overcome the high inflation rate, while managing to avoid a recession. Analysts also make positive projections for the S&P 500 and other indices.
“The consensus among corporate executives has shifted slightly in a more positive direction. The sagging economy is now expected to be milder than many expected six months ago,” Goldman Sachs Group (NYSE:GS) CEO David Solomon said Tuesday at an event hosted by Credit Suisse (SIX:CSGN).
Is the U.S. economy in a recession?
A positive tone also prevailed in a speech by Bank of America Corp (NYSE:BAC) chief Brian Moynihan, who noted the high consumer activity and resilient profitability of mid-cap companies.
“Consumers have money. They have jobs, they’re spending money and taking out loans,” Moynihan said at the financial services conference.
Wells Fargo (NYSE:WFC) Chief Financial Officer Michael Santomassimo also pointed to “very good consumer spending data.”
Such comments contrast with statements by bank executives last year when they expressed serious concerns about the state of the U.S. economy, notes the FT.
Despite the growth in optimism, grounds for concern remain. In particular, the head of Goldman Sachs said that the future trajectory of inflation is still unclear. High rates of growth in consumer prices can be observed for quite some time, which will affect the economy as a whole. “I think we’re going to see weaker, slower growth for a while,” Solomon said.
Earlier, we reported that Deutsche Bank analysts said the likelihood of a U.S. recession is growing.
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo
SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.
With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.
The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.
China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.
The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.
“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.
The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.
($1 = 7.1315 renminbi)
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
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