Watching and Waiting

Trump is starting to apply more pressure, but Powell seems content waiting

Summary: The world is still trying to figure out exactly what comes next with Trump's tariffs. CEO confidence has definitely fallen, and most are expecting some sort of recession or slower growth at best. Consumer spending is still showing resilience in April, though. Meanwhile, Trump is starting to apply more pressure on Jerome Powell, but Powell seems content to keep waiting.

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Macro

The world is watching and waiting
"While our corporate and consumer clients are resilient and in good financial health, the world is in a wait-and-see mode and is facing a more negative macro outlook than anyone had anticipated at the beginning of the year. And we know that prolonged uncertainty generally hurt confidence. The changes underway globally will go beyond trade and tariffs." – Citigroup (C 0.00%↑) CEO Jane Fraser

"At this stage, most of our clients are adopting a wait-and-see approach, and it is difficult to provide any concrete assessment of how significantly this might affect demand from our customers in our major markets around the world." – ManpowerGroup (MAN 0.00%↑) CEO Jonas Prising

Recession risk has risen
"...we are entering the second quarter with a markedly different environment than earlier this year. Our economists’ expectation for growth in the U.S. has fallen meaningfully, from over 2% to 0.5%. The prospect of a recession has increased with growing indications that economic activity is slowing down around." – Goldman Sachs (GS 0.00%↑) CEO David Solomon

"The Company’s guidance is based on consensus market macroeconomic expectations. However, a single consensus no longer exists, and therefore the Company’s expectation has become bimodal – either the U.S. economy will remain weaker but stable, or the U.S. may enter into a recession." – United Airlines (UAL 0.00%↑)

"I might also add that the scenarios in general have gotten a little bit more pessimistic in many respects. Even the baseline tends to move. So I want to just kind of keep in mind the fact that the baseline ultimately if it's working correctly, will kind of follow where we are in the cycle and so from last quarter to this quarter, there's more components within there that kind of sound like higher recession risk." – Hancock Whitney (HWC 0.00%↑) CCO Chris Ziluca

CEOs are delaying investment decisions
"Our clients, including corporate CEOs and institutional investors are concerned by the significant near-term and longer-term uncertainty that has constrained their ability to make important decisions.This uncertainty around the past [indiscernible] potentially escalating effects of the trade war have created material risks to the U.S. and global economy." – Goldman Sachs (GS 0.00%↑) CEO David Solomon

"Business-wise, our customers actually really wanted to make a lot of investments. They want to do acquisitions. They are just really on pause right now. I think it's just lack of confidence. They don't know what the rules of the road are right now. Things keep changing in the DC. And until that settles out a little bit, I think they're going to be on hold until they come through." – M&T Bank (MTB 0.00%↑) SEVP & CFO Daryl Bible

"I spoke with a customer is a pipe manufacturer the other day and who is -- has been working through what would be a pretty interesting acquisition for them. And his comment was if I do the deal today and they were close to getting a deal done, I'm either a hero or an idiot. And I don't like decisions where there are binary outcomes. So the first thing is there just has to be some certainty on -- as it relates to M&A-related activity in the capital markets. it's just very difficult if you're evaluating a major investment like that to make it in an environment where it's not clear what the rules of the road are going to be." – Fifth Third Bancorp (FITB 0.00%↑) President Timothy N. Spence

"Customers are delaying investment decisions pending further clarity. Average consumer loans decreased approximately 1% in the first quarter as lower seasonal production contributed to declines in home improvement finance and residential mortgage. Given the near-term economic uncertainty, we now expect full year 2025 average loans to be relatively stable versus 2024." – Regions Financial (RF 0.00%↑) Senior EVP & CFODavid Jackson Turner

"I would say from macro level, you do hear some reticence about major projects and major moves, but I think at a little more micro and client level, you generally get again, some of the same. But on a smaller, to a smaller degree, continuing to move forward with more business as usual, but maybe some aversion to new big projects until there's a little more of a stable path forward." – FB Financial (FBK 0.00%↑) CEO Christopher Holmes

But not everyone is seeing a recession
"Our research team, like many research teams led by Candace Browning, does not currently believe we'll see a recession 2025. However, they've lowered their GDP growth rates for 2025 and continue to see no rate cuts during ’25, but expect as inflation gets under control you may see them in the future, i.e. in 2016." – Bank of America (BAC 0.00%↑) CEO Brian Moynihan

"At this point in time, client sentiment, while it shows some of the apprehension that Chris mentioned, the customer behavior doesn't really line up with a very near and present fear of an impending recession, particularly one that might be worse than moderate and longer. We typically will see a lot of line draws occur during that time as people pad the balance sheet with excess liquidity, securing whatever forms of capital they have to for a near-term amount of pressure. And we really aren't seeing that." – Hancock Whitney (HWC 0.00%↑) CEO John Hairston

Consumer spending remains stable despite recession risk
"While it's still very early in the second quarter, through the first 1.5 weeks in April, overall spending levels have remained consistent with what we saw in the first quarter in both Goods & Services and T&E and across all customer segments." – American Express (AXP 0.00%↑) CEO Stephen Joseph Squeri

"You can note that consumer spending has been consistently growing year-over-year, but during last year it actually slowed a bit, especially in the summer and picked back up in the fall. That resulted in the fourth quarter of ‘24 over the fourth quarter of ‘23 being about a 4% pace and that pace has continued. That pace has also continued through the first part of April." – Bank of America (BAC 0.00%↑) CEO Brian Moynihan

"We have not seen a dramatic shift in the recent months from consumer behavior. As we've mentioned before that we're seeing a shift towards value, they're clearly more responsive to promotion." – Albertsons Companies (ACI 0.00%↑) EVP & COO Susan D. Morris

"We saw a modest pullback in consumer spending early in the year, and that was very weather-related. And it has stabilized towards the end of March. We are watching the downward trend in consumer sentiment, but not seeing that in our spend patterns." – US Bancorp (USB 0.00%↑) Vice Chairman of Wealth, Corporate, Commercial & Institutional Banking Gunjan Kedia

"Consumer credit metrics remain stable and new consumer loan production spreads are accretive to the overall portfolio. Debit card spend for our consumer clients increased 4% on a year-over-year basis with growth coming across all income bands, and driven by spending areas in areas like travel and entertainment." – Truist Financial (TFC 0.00%↑) CEO, SunTrust Banks William Henry Rogers

Powell is reading tea leaves
"As we gain a better understanding of the policy changes, we will have a better sense of the implications for the economy, and hence for monetary policy. Tariffs are highly likely to generate at least a temporary rise in inflation. The inflationary effects could also be more persistent. Avoiding that outcome will depend on the size of the effects, on how long it takes for them to pass through fully to prices, and, ultimately, on keeping longer-term inflation expectations well anchored." – US Federal Reserve Chair Jerome Powell

But Trump is ratcheting up pressure
"The ECB is expected to cut interest rates for the 7th time, and yet,"Too Late” Jerome Powell of the Fed, who is always TOO LATE AND WRONG, yesterday issued a report which was another, and typical, complete"mess!” Oil prices are down, groceries (even eggs!) are down, and the USA is getting RICH ON TARIFFS. Too Late should have lowered Interest Rates, like the ECB, long ago, but he should certainly lower them now. Powell’s termination cannot come fast enough!" – US President Donald J Trump

Powell's life could start to move pretty fast
"We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension. If that were to occur, we would consider how far the economy is from each goal and the potentially different time horizons over which those respective gaps would be anticipated to close. As that great Chicagoan, Ferris Bueller, once noted, 'Life moves pretty fast.'" – US Federal Reserve Chair Jerome Powell

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