We are probably heading for recession: Citi CEO

U.S. gross domestic product (GDP) rose at an annual rate of 1.1% in the first quarter of 2023. That is the third-straight quarter of growth for the U.S. economy. The technical definition of a recession is two straight quarters of negative GDP growth. So while the U.S. is not in recession now, market leaders are warning of the possibility that a recession is on the horizon.

Citi (C) CEO Jane Fraser joined Yahoo Finance’s Brian Sozzi from the 2023 Milken Institute Global Conference. Fraser said she thinks the U.S. is heading for a recession in the back half of the year. “There is likely to be credit tightening,” Fraser said. “There's some stresses ahead, commercial real estate and the like, but this should be manageable.”

You can watch the full interview here.

Key Video Moments

00:00:12 How the current bank crisis isn't like 2008 financial crisis

00:00:53 On health of consumer

00:00:58 On possible recession and stresses ahead

Video transcript

BRIAN SOZZI: The average investor out there, and as someone who lived and operated through the Great Financial Crisis, does this feel like that? Does this resemble anything from that situation more than a decade ago?

JANE FRASER: Not in the least. This is very, very different. I think that the bank-- the banking system-- I can speak for our own bank-- much, much simpler, much more focused business model. We have a diversified, a very resilient business model. A lot of clarity who we are. Our credit position is very strong. 90% of our international exposure is investment grade. 85% of our entire corporate exposure is investment grade. 80% of our portfolio is prime on the consumer side.

So this-- this is very different for the large banks. This is different for the system overall. Consumer is in good health. The corporate is in good health. We do think we are probably heading into a recession the back end of this year. There is likely to be credit tightening. There's some stresses ahead for commercial real estate and the like. But this should be manageable.