President Joe Biden expressed hopefulness about the economy following a dismal GDP report on Thursday, but Wall Street executives are preparing for the worst, according to Politico.
The U.S. economy’s annual growth rate slowed more than expected to 1.1% in the first quarter of 2023, according to GDP statistics released by the Bureau of Economic Analysis (BEA) on Thursday morning. The vast majority of the financial sector agrees the economy will continue facing difficulties this year as over a dozen large banks predicted poor growth or a recession, according to Politico.
“The U.S. economy is unwell, and it’s starting to show,” Chief Economist at EY-Parthenon Gregory Daco tweetedThursday morning.
Growth was 2.6% in the fourth quarter of 2022, and economists had expected 2% growth for the first quarter of 2023, according to The Wall Street Journal. “Today, we learned that the American economy remains strong, as it transitions to steady and stable growth,” Biden said in a statement on the GDP.
“We continue to expect economic growth to slow, and we are preparing for a range of scenarios,” Wells Fargo CEO Charlie Scharf said on a first-quarter earnings call on April 14.
Other financial executives are making comparable remarks during earnings calls as well, although few are forecasting a major economic downturn, according to Politico.
“Our research team continues to predict a shallow recession that will occur beginning in the quarter three of 2023,” Bank of America CEO Brian Moynihan said on a first-quarter earnings call on April 18.
Consumers experienced continuing inflation and rising interest rates, contributing to a decline in retail spending in February and March, according to the WSJ. Home sales and manufacturing output also decreased in March.
The Federal Reserve has been hiking interest rates in an effort to lower inflation and has raised them to a target range of 4.75-5%.
“I’ve never been more optimistic about America’s future,” Biden has repeatedly stated.
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