Citigroup CEO Jane Fraser: It's hard to get a soft landing

Given some of that scope that you just laid out, what are you seeing from your clients, both business and consumer individuals as far as spending and just where we are in this odd economic cycle? Yes, from the corporate space, I think we see a fair amount of spend and focus around building resilience. So global lanes have really changed in the last few years, driven by geopolitics and technologies. So food lanes, energy lanes, financial flows, defence spending, the supply chains, they’ve all really reconfigured. So we’ve seen our clients put a lot of investments behind that. At the same time, technology is really changing business models. And so I think particularly here in the States, the dialogue is quite strategic on transformation and we’re seeing that translate into investment into activity as as the markets recover. So that’s been good to see. And on the consumer, it’s AK shaped, consumer K shaped. So a lot of the growth in spending has been in the last few quarters with the affluent customer, we’re seeing a much more cautious low income consumer. They’re feeling more of the pressure of the cost of living which has which has been high and increase for them. So while there is employment for them debt servicing levels of the year is higher than they were before. So they’re being, they’re being mindful of their spend. Do you have any concerns at this point about delinquency rates and cards and extra credit card debt? We’re a little bit privileged Sarah because as you and I’ve talked about we we’re pretty prime might be they’re pretty prime heavy one, but we are keeping an eye on that below of FICO consumers and they they are definitely feeling more of the stress they have. They’re paying rent. They’re not sitting on a 30 year fixed income mortgage at low rates. So they’re definitely feeling more of the inflationary pressures. And I think like everyone here, we’re hoping to see the economic conditions that will allow rates to come down sooner rather than well that’s what I was going to ask is what your expectation is at this point for what happens to inflation and Fed cuts. I think the one thing we can be quite certain about, and it’s probably the only thing is there are more opinions about where the rate cuts are at this conference than there will be rate cuts this year. There’s a lot of, there’s a lot of different perspective landing. I think the questions now not only when and how much, but also where. I think before everyone thought it would be everyone together. I think that that that has changed. Now we have to see where wage inflation goes. We have to see what happens with services inflation and I think we need some more data points. It’s it’s hard to get a soft landing. We’re hopeful, but it is always hard to get one. So far, the Fed’s just trying to navigate quite a complicated system. Do you worry about sticky inflation? Do you see evidence of it in surfaces more so than in goods? I think in goods we’re in much, much better shape. Supply chains are in better shape, and surfaces is definitely the stickier one. But things are headed in the right direction. It’s just we’d love it if it would go faster that way than it has been. Geopolitics is also an issue that you obviously everyone pays close attention to. But as the more global bank in some of these countries that have been affected, how is it influencing what businesses are doing, the decisions they’re making and how it impacts Citigroup, Baltimore, Look, I think we’re seeing, we’re seeing as I saying these these lanes changing globally. So you’ve got a number of bright spots around the world. The Middle East is a bright spot. India is a bright spot. Japan is a bright spot. Mexico and the US, And I’ve really noticed this year how many companies and investors around the world are looking at the US to invest. Despite some of the challenges that they hear from regular and other approvals, they really see this as a lot of the forces going in the US as benefits. My bigger worry on geopolitics is we could be in for a period of more naked protectionism between the West and between China. And I think that’s likely to heat up with the election and then next year as well. So that’s the one that I’m most mindful of is I hope we don’t end up with naked protectionism, but I think we’ll certainly head more in that direction. That’s because you’re worried about the impact on growth. Yes. Yes. I mean it’s it’s, it’s never as good for the world. When you’ve got that, it makes it, it will make it a bit more fragmented. That said, I’m not that negative on growth around the world. I think it’s slowing a bit at the moment, but look how resilient people are, the consumers, resilient the corporates are in very strong health and that’s a good underpinning to have.