Bankers look to Asia for glimpse of what U.S. recovery could look like
Banks are looking across the Pacific for insights on how quickly the U.S. economy is likely to rebound from the coronavirus crisis.
Because Asian nations have generally contained the virus more effectively than the U.S. has, they are further down the path of reopening their economies. Still, Asian consumers remain cautious about spending money, Citigroup President Jane Fraser said Wednesday at an online conference.
“The consumer is far from firing on all cylinders in Asia, and I think that’s a point of concern for us here in America,” said Fraser, who heads global consumer banking at Citi.
Fraser expressed additional concern about the potential curtailment of government relief to U.S. consumers. Expanded unemployment benefits and cash aid to individuals have enabled many Americans who lost their jobs or saw their wages reduced to stay current on their bills.
“So this first phase has worked well, but the future at this point is anyone’s guess,” Fraser said during the conference, which was sponsored by Bloomberg.
As stay-at-home orders have eased in recent weeks, millions of Americans have been rehired. But more U.S. job losses are likely in the coming year, according to Goldman Sachs CEO David Solomon, who spoke at the same conference Wednesday.
He pointed not to jobs lost because companies are forced to shut down, but rather jobs eliminated as firms find more efficient ways to operate during the pandemic.
“I think that’s going to have a toll as we get into 2021," Solomon said. "And that’s not something that’s specific to financial services.”
Both Citi and Goldman have large international footprints that offer insights into how the novel coronavirus is affecting countries across the globe. Solomon said that across Asia, approximately 50% of Goldman Sachs employees have returned to their offices, compared with roughly 5% of the firm’s workers in New York.
“I think Asia is definitely leading the way out,” he said.
Solomon also warned that COVID-19 has amplified existing tensions between China and Western countries, including the United States.
“I think there’s no question that nationalism’s on the rise,” he said. “There are global tensions, particularly the U.S.-China relationship, but also China’s relationship with the developed world more broadly, that are making the world a little bit more complicated to navigate if you’re operating globally.”