Citi CEO Says US Will Find It Difficult to Avoid a Recession

(Bloomberg) — Citigroup Inc. Chief Executive Officer Jane Fraser said the US will have difficulty avoiding a recession, though a severe downturn is not the bank’s “base-case” scenario.

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“Europe definitely felt more likely to be heading into a recession than you see in the US,” Fraser, who just returned from a trip to Europe and Asia, said at an investor conference Friday. Still, even in the US, a recession is “not easy to avoid.”

Fraser’s comments added to a flurry of pessimism among banking executives in recent days. Jamie Dimon, her counterpart at JPMorgan Chase & Co., said Wednesday that he sees an economic “hurricane” approaching. And Goldman Sachs Group Inc. President John Waldron called the number of shocks facing the economy “unprecedented.”

The data still don’t support predictions of looming catastrophe. Friday’s jobs report showed bigger-than-expected payroll gains, and economists see a recession as unlikely next year. A Bloomberg survey estimates a 30% chance of recession in the next 12 months, up from 15% in March.

Fraser said Citigroup’s traders are dealing with a burst of activity from corporate clients looking to place bets on Group of 10 rates and foreign exchange. But that volatility may soon subside as investors adjust to the pace of rate hikes the Federal Reserve has laid out for the US, she said.

“I think on the markets side it’s been healthy,” Fraser said. “It’s very good volatility and it’s one where we’re in there helping clients manage foreign exchange, manage volatility.”

The New York-based firm’s dealmakers and underwriters have seen a slowdown in activity when compared to last year’s elevated levels. For the most part, Citigroup is seeing deals get delayed rather than pulled entirely, she said.

“We probably have a little bit less confidence about how active the second half of the year will be,” Fraser said. “You could see some more things coming back, so we’re in a bit more of a wait-and-see mode to see what happens there.”

(Updates with Fraser’s comments on markets starting in fifth paragraph.)