“” It feels more like a normal environment again, and we are paying attention to the lower FICO consumer where there are cracks and we saw that in the Fed numbers savings are down. They’re very low at the moment. And I think some of the excess savings from the Covid years are getting close to depletion….All the numbers right now would suggest you’re in for a soft landing.””
That’s Citigroup Inc. Chief Executive Jane Fraser, who, on Friday, echoed sentiments in the marketplace about a mild recession on the horizon in an interview with CNBC’s Squawk Box.
Fraser also commented on her reorganization underway at Citigroup
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and said estimates on headcount reductions and cost savings will be revealed by the time the bank provides its fourth-quarter earnings results in January.
“We’re focused on simplifying the bank so it’s much more about eliminating the complexity, flattening the organization, taking out layers, getting easier for people to work together and to deliver to clients,” Fraser said. “We’ll be in a place to give the Street a better sense of exactly what does it mean? Not just in terms of savings, but really how this delivers that simpler organization that we’re all looking for.”
Overall, consumer spending is still good, she said, but it’s come off of the double-digit percentage rises it had in recent quarters, as demand softened in September.
“Service is still getting a fair amount of that spend over goods. Travel has been good — we’ve seen that in businesses and entertainment,” Fraser said. “Food has been strong. Obviously with the rise in gas prices being a bit of pickup there.”
Citigroup is seeing growth in its services franchise, and new-client acquisitions, as well as taking aim at an uptick in capital markets activity in the bond market as well as some initial public offerings in its investment banking businesses.
“It’s picking up but everyone’s feeling that it is early,” Fraser said. “We saw the investment grade markets open up and they’ve been the strongest ones as it’s usually the client sitting there saying, ‘Okay, I’m going to bite the bullet on the higher rates’ [and we’re] starting to see some more activity. We’re certainly gearing up ourselves to be much more active in that market.”
Economic challenges face China and Europe and in the U.S., sentiment remains that interest rates could go higher.
“Look, all the numbers right now would suggest you’re in for a soft landing — inflation is coming down,” Fraser said. “We’re about halfway to where we want to get to inflation. And that when you look at it in terms of unemployment, and job creation, you look at the GDP, all the indicators are a soft landing.”
Market watchers remain cautious, however, Fraser said.
“History would suggest that second half is a tougher half to achieve in the numbers than the first half on inflation,” she said. “However, we’re starting to see the economy do some of the work of it for the Fed now. So it is definitely softening. And if we start seeing another few sets of data’s in the coming weeks, then I think that will make the Feds job easier.”
Also read: ‘I see more fear than anytime in my business career,’ says BlackRock’s Larry Fink
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