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Citigroup CEO: I Don't See a Recession in the Near Future

July 17, 2019 00:00 AM UTC
- Updated September 02, 2020 11:33 AM UTC

Michael Corbat explains why he’s optimistic.

Transcript
[MUSIC PLAYING] Mike, let's talk a little bit about the US economy. There's so much speculation and concern that a recession is right around the corner. Is that your outlook? Right around the corner, we don't see it. We're 10 years into a recovery. That's, by historic standards, a long recovery. And I think there's skepticism as to how long that can go on. And if you look at employment, high unemployment low, jobs matter. And I would say the US is in pretty good shape. To the consumer, housing matters and housing prices. And we can argue pockets here and there, up or down. But in general, housing is in pretty good shape, and business confidence is reasonable. And so near-term, I don't see the recession. And as I've said before, my biggest fear is that we're in the process of talking ourselves into the next recession, as opposed to the next recession necessarily really coming at us. And if we convince ourselves, economists and market strategists convince us-- Becomes self-fulfilling. Well, because already, the markets are pricing in a interest rate cut in July, maybe two more between now and early next year. If that happens, what do lower interest rates mean for Citibank? Does that help or hurt your business? Well, I would say that when you think of the deposits we have and what we earn on those deposits, as interest rates come down, in general, we make less. I wouldn't say that in any way that it's significantly needle moving for us. I think more importantly, it's what do those lower rates signal? Do they signal economic distress? Do they signal the ability to create economic rebound and growth? So I would say it's more in the trajectory and stability that comes from those cuts than in the actual cuts themselves. Talk to us a little bit about business confidence. You travel all around the world. You're talking to your bank clients. Many of them are CEOs. What are you hearing about them in terms of the impact of the uncertainty about this tariff war with China? Brexit, market volatility here in the US. Are they going ahead, doing business as usual, or are they holding back? I think they've become more conservative. The conversation that I have and I have them frequently with business leaders, is they've become more conservative around what is business really like? What does business react to? It reacts to certainty or reacts to knowing what's ahead. Because we're not running our businesses for 90-day quarters or even one year. We're running our businesses for cycles. And you need the ability to be able to see or believe you can see the cycle and be willing to step out and make the investment, whether that's hiring more people or investing in plant and equipment or Capex or whatever those things may be. And I can see in my conversations, certainly if I go back to just off the heels of synchronized global growth and tax reform, a more conservative approach. How would you rate consumer confidence? I would could rate consumer confidence as being relatively high and above business confidence. And if you think about really what matters to a consumer, in many ways, I can boil it down to two things-- employment, jobs. Do I have a job? Can I keep my job? If I don't have one, can I get one? And typically, the consumer's big investment is their home. And I think we've had rising housing prices. We've had good stability post crisis in housing prices. And so we've seen for quite a while here a very engaged consumer. And again, that's just not here in the US, but around the world. And I would say probably the best part of this recovery, or the biggest catalyst or impetus around this recovery, has been the consumer. You sound pretty optimistic and upbeat. We've got trade issues. We've got societal and political issues. But again, as I look around the world and the things that we're doing and from a technology perspective, from an engagement standpoint, and from the positioning of our company to be able to help those people, I'm excited about the future. Everybody's got a worry list. What's at the top of yours? I'm sure everybody who sits in this chair probably starts out with cyber, right? That cyber is just-- I don't care where you are, what industry you're in, that cyber continues to escalate as a threat. The threats out there aren't likely to go away. And this is a big issue for Citi and all of your banking clients. Well, I think it's a big issue for society. But from a bank perspective, think about what we're tasked with. We're a repository or depository of stored value. It's not just your money. It's your identity. It's your credentials and who you are. And we have a responsibility to try and do everything that we can to protect that.