Recession warning from the world’s largest asset managers

The world’s leading asset management companies, BlackRock and Amundi, warned that the risk of recession in the US has increased. Despite the growing opinion in the market that “the restrictive measures of the Federal Reserve will not cause great damage to the economy”, the recession warning coming from companies attracted attention.

The U.S. economy appears largely resilient in the face of the Federal Reserve’s aggressive monetary tightening, but cracks are emerging in the labor market, senior fund managers at BlackRock and Amundi said.

recession warning

The warnings from executives who spoke to the Financial Times came at a time when most of the market was expecting a soft landing from the Federal Reserve. Vincent Mortier, chief investment officer at Amundi, which manages $2.1 trillion in assets, said: “The possibility of a recession is very high for us. “The question is how deep and long the recession is,” he said.

Mortier said they are most concerned about the dynamics in the U.S., adding that he expects the contraction to occur late this year or early next year.

Rick Rieder, chief investment officer of global fixed income at BlackRock, which manages $9.4 trillion in assets, said he has become more pessimistic about the state of the U.S. economy in recent weeks.

Rieder said he thought the country would avoid a severe recession, but the slowdown had already begun.

“We were very excited about the economy,” Rieder said. But now I think we are seeing some concrete signs of a slowdown. “I don’t think the recession can be erased,” he said.

CALLING ATTENTION TO UNEMPLOYMENT

Mortier and Rieder pointed to recent problems in the labor market as evidence of the slowdown. Unemployment rose from 3.5 percent to 3.8 percent in August, exceeding economists’ forecasts.

“For the first time there is visible slack in the workforce,” Rieder said. Mortier said a weaker labor market would negatively impact consumer demand, putting pressure on profits.

Reider recently announced his predictions for Federal Reserve interest rates. Rieder stated that the possibility of further interest rate increases has diminished: “Now the Federal Reserve is very close to achieving it, even if it is not completely finished.”