Wall Street banks worry about economic storms ahead

Wall Street’s biggest banks sounded cautious on economic headwinds ahead, reducing risk in certain areas as they assess the likelihood and severity of recession, with JPMorgan’s Jamie Dimon likening the environment to a coming “storm.”

Banks are facing a tough economic backdrop with sky-high inflation worrying consumers, under-pressure markets hurting investment banking and inverted portions of the US Treasury yield curve adding challenges to generating income, Reuters reports.

“The environment – if I had to use one word to describe it, it would be complicated,” said Morgan Stanley Chief Executive James Gorman, citing the conflict in Ukraine, interest rate increases, economic threats and other factors.

“I think it’s important to say, though, it is not 2008 complicated. This is a different type of financial stress in the system. And frankly, the banking sector is much stronger than it was going into the last time.”

Banks started reporting earnings a day after data showed consumer prices in the U.S. surged 9.1% last month, a surprisingly sharp acceleration from May.

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