US companies are sounding the alarm bells on the economy

(Bloomberg) – American companies have suddenly and radically changed their outlook on the American economy.

Bloomberg’s Most Read

Executives from Jamie Dimon and Elon Musk to furniture retailer HR director Gary Friedman all warned investors this week to beware of an economic downturn. After months of strong consumer spending and supply chain improvements, some of the nation’s most vocal business leaders have begun to ratchet up alarms about decades-high inflation and impending rate hikes. of interest.

“We have a long way to go to raise interest rates to fight inflation,” Friedman said during HR’s earnings call on Thursday. “And I think you just have to be ready for anything right now.”

Musk reportedly told Tesla Inc. employees this week that he had a “super bad feeling” about the economy and needed to cut 10% of jobs at the electric car maker, according to Reuters.

The tone contrasts with Friday’s jobs report showing bigger-than-expected payroll gains. And economists still see the risk of a recession as unlikely next year, even though the odds have increased. A Bloomberg survey puts the risk of recession at 30% over the next 12 months, up from 15% in March.

The sense of doom has been particularly evident in the banking sector, where Dimon told investors this week that they should prepare for an economic “hurricane”.

“This hurricane is right out there in the road,” the CEO of JPMorgan Chase & Co. said Wednesday, citing rising interest rates and fallout from Russia’s invasion of Ukraine. “We don’t know if it’s Minor or Superstorm Sandy. You better be prepared.

Goldman Sachs Group Inc. Chairman John Waldron echoed the theme the next day, calling the current economic climate one of the most complex he’s ever seen. “The confluence of the number of shocks on the system is unprecedented for me,” Waldron said.

BlackRock Inc. CEO Larry Fink said he expects inflation to remain elevated for several years. And PNC Financial Services Group Inc. CEO Bill Demchak said the only possible outcome was a recession.

Elsewhere, S&P Global Inc. suspended its annual forecast this week, citing deteriorating economic conditions and “extraordinarily low” volumes of debt issuance.

Still, some bank executives are counting on the continued strength of the US consumer. Holly O’Neill, president of retail banking at Bank of America Corp., said there were no signs yet that this pillar of the economy was beginning to crumble.

“We don’t see any signs of cracks,” O’Neill told an investor conference. “We obviously watch this every day.”

Bloomberg Businessweek’s Most Read

©2022 Bloomberg LP

Comments are closed.