Bank of America CEO Brian Moynihan downplayed dire forecasts about the state of the US economy this week even as a fellow bank boss, JPMorgan Chase’s Jamie Dimon, warned of a looming “hurricane” for investors.
Moynihan delivered his own outlook for the economy at the same conference in which a more pessimistic Dimon expressed alarm about the dual threats of the Federal Reserve’s interest rate hikes and disruptions related to the Russia-Ukraine war.
“We’re in North Carolina,” Moynihan quipped during his appearance at the conference on Wednesday. “You’ve got hurricanes that come every year.”
Moynihan nevertheless acknowledged that the Fed “has a tough job to do” as it aims to cool decades-high inflation with a series of aggressive interest rate hikes without triggering an economic recession. Investors have expressed skepticism that the Fed’s bid to engineer a “soft landing” for the economy will be successful.
Dimon ratcheted up the intensity of his weather-themed warning after previously telling analysts that he saw “storm clouds on the horizon” for the economy.
“It’s a hurricane. Right now, it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle this,” Dimon said during the conference sponsored by AllianceBernstein, according to Bloomberg.
“That hurricane is right out there, down the road, coming our way,” he added. “We just don’t know if it’s a minor one or Superstorm Sandy or Andrew or something like that. You better brace yourself.”
The Bank of America boss expressed support for the Fed’s expected move to hike interest rates by a larger-than-normal half-percentage point at meetings in June and July. Moynihan also argued that parts of the economy remain strong as the central bank aims to establish “equilibrium.”
“The best thing about the tough job is the part that makes it tough is actually a good thing — a low unemployment and good wage growth and good consumer spending,” Moynihan added. “Those are good things.”
Concerns about the Fed’s plan have driven a downturn in US stocks since the start of the year. Bank of America shares are down more than 21% since January 1, while fellow banking giants JPMorgan Chase and Goldman Sachs are each down about 19%.
Goldman Sachs president and COO John Waldron kept with the weather theme while addressing his own concerns about the economic outlook.
“I’m going to try not to use any weather analogies, but I would say the following. I think this is among, if not the most complex dynamic environment I’ve ever seen in my career,” Waldron said at the conference on Thursday, according to Barrons.
Warning about the economy aren’t limited to the banking sector. On Friday, Tesla boss Elon Musk said he has a “super bad feeling” about the situation and wanted the electric car maker to cut about 10% of its employees.