U.S. Bancorp leaders on Wednesday joined the parade of top bank executives with an upbeat outlook for the U.S. economy just as it’s on the verge of the longest expansion ever.
Investors and analysts routinely press bankers for economic sentiment since they have direct knowledge of financial activity, especially borrowing, by consumers and businesses. But as banks reported first-quarter results over the past week, the questioning seemed more intense.
“Today, we still think it’s a very solid economy,” Terry Dolan, the company’s chief financial officer, said as the Minneapolis-based company reported a 1.4 percent jump in profit for the first three months of the year.
“Corporate spending continues to be fairly robust,” he said. “Capital spending and those type of investments typically mean CEOs and CFOs are confident the economy is moving forward.”
The current upswing in the economic cycle, which in July will surpass the 1990s expansion as the longest in U.S. history, is bound to break lower sometime. As the 2020 presidential election edges nearer, the prospect of such a break becomes important politically and may determine the country’s next leader.
Forecasts for U.S. growth are lower this year than in 2018 but few expect growth to turn negative. The Federal Reserve recently decided to stop raising interest rates, which some saw as a signal that the central bank’s policymakers are worried about a slowdown or downturn. President Donald Trump for months criticized the Fed’s rate hikes as a threat to the economy.
Dolan said he believes the Fed’s move reflects the timing or pace of rate hikes. “They don’t want to get ahead of themselves, and they’re pausing to allow the growth in the economy to continue,” he said.
Jamie Dimon, chief executive of JPMorgan Chase, the nation’s largest bank, said earlier this month that the U.S. economic expansion could roll on for several more years. “There may be a confluence of events that somehow causes a recession, but it may not be in 2019, 2020, 2021,” Dimon said.
Bill Demchak, chief executive of PNC Financial Services, the Pittsburgh-based firm that is just smaller than U.S. Bancorp, told analysts this week, “We have seen very little from our clients that would indicate that there is inherent weakness in the U.S. economy.”
But he warned there is “clear weakness in the global economy” that will weigh on the U.S.