{"id":42417,"date":"2023-07-31T02:00:48","date_gmt":"2023-07-31T06:00:48","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/hard-recession-or-a-soft-landing-ceos-weigh-in\/"},"modified":"2023-07-31T02:00:49","modified_gmt":"2023-07-31T06:00:49","slug":"hard-recession-or-a-soft-landing-ceos-weigh-in","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=42417","title":{"rendered":"Hard Recession or a Soft Landing? CEOs Weigh In."},"content":{"rendered":"
\n

Elon Musk isn\u2019t the only person who longs for a crystal ball these days. A number of prominent executives admitted during second-quarter earnings calls that it is hard to know which way the economy is heading, although many are optimistic that the U.S. will avoid a full-blown recession this year, and maybe even next.<\/p>\n

\u201cOne day, it seems like the world economy is falling apart. And the next day, everything is fine. I don\u2019t know what the hell was going on, to be totally frank. I wish I did,\u201d Musk said last week during
\n Tesla\u2019s<\/span>
\n (ticker: TSLA) earnings call.\u00a0<\/p>\n

\n

Many investors can relate to that sentiment\u2014and more than a few CEOs can, as well. Dominic Ng, CEO of regional bank
\n East West Bancorp
\n (EWBC), called the macroeconomic situation \u201cuncertain\u201d during the bank\u2019s second-quarter earnings call. \u201cAnyone [who] said that they know exactly what\u2019s going on in the future is kidding themselves, right?\u201d he said. \u201cWe really don\u2019t know. With the [interest] rate spike like that, I thought the recession [should] have already arrived by now. It didn\u2019t.\u201d\u00a0<\/p>\n

The CEOs of some leading financial firms and major corporations are more upbeat and expect a so-called soft landing for the economy, wherein the Federal Reserve brings inflation back down to its 2% target without clobbering demand and triggering a major recession.\u00a0<\/p>\n

\u201cI think the Fed is going to successfully engineer a soft landing. I think it will probably happen in 2024,\u201d Chris Gorman, CEO of
\n KeyCorp
\n (KEY), said during a July 20 earnings call.<\/p>\n

\u201cI think the soft landing feels right,\u201d
\n PNC\u2019s<\/span>
\n (PNC) Bill Demchak said.<\/p>\n

Tim Spence, chief executive of
\n Fifth Third Bancorp
\n (FITB) similarly said it was \u201cvery possible\u201d that the economy achieves a soft landing.<\/p>\n

\n Hilton Worldwide Holdings
\n (HILT) raised its full-year guidance, with CEO Chris Nassetta saying he feels \u201cvery good\u201d about momentum right now. He expects there will be a slowdown, but it will be more of a\u2014you guessed it\u2014soft landing.<\/p>\n

The positive shift in executives\u2019 outlook has been reinforced by recent economic data. The preliminary estimate of second-quarter gross domestic product came in much higher than expectations, at a seasonally adjusted 2.4%, annual rate, driven in large part by business investment. <\/p>\n

\n McDonald\u2019s
\n (MCD) CEO Chris Kempczinski told investors this week that the fast- food giant is exploring new markets for a future restaurant footprint. \u201cThere\u2019s a number of places around the U.S. where we are significantly underdeveloped relative to where the population exists today,\u201d he said. \u201cThat opens up for us a whole bunch of development opportunities.\u201d<\/p>\n

Diminishing inflation also has much to do with bosses\u2019 more benign outlook. Headline inflation cooled to 3% in June, as measured by the consumer price index, while unemployment remained near historical lows. \u201cIn the U.S,. the tight labor market keeps pushing the timing of this elusive recession later into this year or 2024, with the robust demand for services providing a backstop for the economy,\u201d said
\n Citigroup
\n (C) CEO Fraser said.\u00a0<\/p>\n

Although the pace of consumer spending moderated in the latest quarter, many top executives see the Americans as fairly resilient. \u201cBoth the lower-income consumer and our higher-income consumers are showing really good strength,\u201d Brian Niccol, CEO of
\n Chipotle Mexican Grill
\n (CMG), said this past week. \u201cWe\u2019re not seeing any weakness in the lower-income consumer. If anything, they\u2019ve continued to improve.\u201d<\/p>\n

Other corporate leaders hedged a bit more, saying the U.S. might slip into a recession\u2014but caveating that the downturn would be mild. \u201cWe think there\u2019s probably a fairly equal weight probability that we\u2019ll either see a soft landing or a mild recession. And if we do get a recession, our models would indicate it would be short and shallow either late this year or early in 2024,\u201d Andy Cecere said during
\n U.S. Bancorp\u2019s<\/span>
\n July 19 earnings. He added U.S. Bank has one more rate hike by the end of the year modeled in.\u201cBig picture, we think the Fed is close to being done.\u201d<\/p>\n

Mentions of a soft landing during earnings calls so far this quarter are up 97% over the year\u2019s first quarter, according to data pulled from AlphaSense on Thursday.<\/p>\n

\n JPMorgan Chase
\n (JPM) CEO Jamie Dimon was relatively quiet during his company\u2019s quarterly earnings call, but chose to highlight that the U.S. consumer is in \u201cgood shape,\u201d and that this is good news. \u201cEven if we go into recession, we\u2019re going with rather good conditions, low borrowings, and good house-price values still,\u201d he said. <\/p>\n

But Dimon called the headwinds facing the U.S. economy\u2014the war in Ukraine, energy price volatility, and the challenges posed by quantitative tightening\u201csubstantial and somewhat unprecedented.\u201d\u00a0<\/p>\n

\u201cWe don\u2019t know if those things could put us in a soft landing, a mild recession, or a hard recession,\u201d Dimon said.<\/p>\n

We\u2019ll have to wait for third-quarter earnings season to learn more.<\/p>\n

Write to Megan Leonhardt at megan.leonhardt@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Elon Musk isn\u2019t the only person who longs for a crystal ball these days. A number of prominent executives admitted during second-quarter earnings calls that it is hard to know which way the economy is heading, although many are optimistic that the U.S. will avoid a full-blown recession this year, and maybe even next. \u201cOne […]<\/p>\n","protected":false},"author":1,"featured_media":42418,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-42417","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nHard Recession or a Soft Landing? CEOs Weigh In. | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Elon Musk isn\u2019t the only person who longs for a crystal ball these days. 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