America’s largest banks are beginning to prepare for a shallow recession this year with the major lenders tightening up their loan books.
The market reaction to the news was positive as share prices for the banks went up over the weekend helping the Australian market boost this morning with the ASX market opening at a 0.32 per cent rise….(read more)
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US Banks Begin Bracing for Shallow Recession
As the economic landscape continues to shift, US banks are starting to brace themselves for what some experts are calling a shallow recession. A combination of factors, including slowing economic growth, rising trade tensions, and geopolitical uncertainties, have prompted banks to take precautions in order to weather the storm.
This preparation comes after a decade of economic expansion following the global financial crisis of 2008. While the US has experienced significant growth during this time, there are growing concerns that the economy may be approaching a downturn.
One of the key indicators that has many banks concerned is the flattening yield curve. The yield curve plots the interest rates of bonds with different maturities. Historically, an inverted yield curve, where short-term rates exceed long-term rates, has often predicted an economic recession. While the yield curve has not inverted yet, it has been flattening, which is seen as a warning sign to many economists.
To mitigate risks, banks have taken various measures. This includes increasing their capital levels and carefully managing their loan portfolios. By strengthening their capital reserves, banks are better positioned to absorb losses in the event of a downturn. Additionally, they are examining their loan books to ensure they are not overexposed to sectors that may be vulnerable during a recession, such as housing or manufacturing.
Furthermore, banks have tightened lending standards as they become more cautious about issuing loans to both businesses and consumers. They are more closely scrutinizing the creditworthiness of borrowers and demanding higher collateral or down payments to mitigate potential defaults.
Some banks have also turned their attention to cost-cutting measures. In anticipation of a slowdown in activity, institutions have been reviewing their operations and identifying areas where they can streamline processes and reduce expenses. This may include layoffs or branches closures in an effort to maintain profitability during a recession.
However, it is worth noting that while banks are preparing for a potential recession, there are differing opinions among economists regarding the severity and timing of such an event. Some argue that the slowdown may be more modest, resembling a shallow recession, while others point to the possibility of a more severe downturn.
Despite the uncertainty, banks’ preparations indicate that they are taking a proactive stance to mitigate risks and protect their businesses. By focusing on building capital, managing loan portfolios, tightening lending standards, and implementing cost-cutting measures, they aim to navigate through the potential headwinds of an economic downturn.
Overall, US banks are bracing themselves for a shallow recession by taking the necessary steps to strengthen their financial positions and protect their investments. Only time will tell how accurately their preparations align with the actual economic trajectory, but their proactive approach signals a resilient banking sector that is ready to face potential challenges head-on.
They better be preparing for an epidemic worldwide depression the likes of which is going to make the Great Depression look like the Roaring Twenties
If they are mentioning this it’s not going to be “shallow”. Layoffs, credit card debt, auto repossessions, higher rent and housing costs – this is not looking good.
How the hell will the depression recover enough to be a shallow recession?
As shallow as Albo's promises.
VOTE NO TO THE VOICE.
Shallow, who came up with that down play, the shits hitting the fan harder than ever
Watch Jamie Diamond.
He doesn’t know if it will be shallow or deeper than that.
Hurricane Jamie …..
Be careful .
Things have a habit of turning out worse than expected.
Inflation will be sticky.
Oil prices is high with the war raging.
Commercial real estate is crashing.
Tech co are firing lots of people.
Residential house prices are high RIGHT NOW but can it hold when int rate is so high and will remain high for quite long.
It may crack ……and things may spiral from there.
Be CAREFUL.
Let the world BURN!
It's just transitory hey sky… why don't you give them a chance to stock up on food and start gardens instead of just lying to their faces?
We've been in a recession since July 22, just because Biden says were not doesn't make it true
Those who were awake knew this would happen two years ago. Crash world economies and begin the great reset
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Like a "slight pregnancy" is it?
Ahhh, if only Americans had done the right thing in 2020, and elect someone who didn't have dementia…
Spinning it to cover up that a massive crash and depression is imminent.
My advice than anybody has any money and JP Porygon or this citigroup that this man's talkin about pull your money out pull your money out now because you got the paper one thing if these Banks go down word literally screwed with these big banking systems in the first place the same way they bailed out them to Banks one in California and one in New York with your been tax dollars a big recession is coming and it's all due to your president of the United States of America not mine because I wasn't stupid enough to vote for Democrat in the first damn place even though I am a registered Democrat I haven't voted for a Democrat to be in office even before Clinton announced he wanted to be the president of the United States of America does that tell you how long ago that was damn near thirty years ago
Hold on to you're hat people… reckon big change coming and soon.
Shallow recession means deep depression for the MAGA CULT
Lol
No body braising for SHALLOW :)))))))