Recession not likely, says Morgan Stanley’s Gorman
Morgan Stanley chairman and CEO James Gorman, who is stepping down from that lofty perch next year, said Wednesday morning in a conference call with analysts that a recession is not on the immediate horizon.
Gorman’s call comes after months of speculation by a variety of market participants, including some financial advisors, that a recession was looming. That means that clients who have built up cash positions in the face of a potential economic slowdown may want to consider a change of course, according to Gorman, who oversees Morgan Stanley’s 15,000 or so financial advisors, some of the most highly productive in the industry when measured by annual revenue.
“What’s remarkable is we haven’t had a recession, by the way … and I personally don’t think we’re going to,” said Gorman, who was speaking to analysts about the bank’s third-quarter earnings and answering a question about net interest income and the bank’s wealth management business. “If you’re an advisor and you’ve got a client sitting on a lot of cash earning zero, I would hope you’re telling them to put it in Treasuries or something.”
While interest rates sat at almost zero percent at the start of 2022, the fed funds rate has reached more than 5% this year.
While a recession has been in the forecast in 2023, the economic downturn — formally defined as two consecutive quarters of declining GDP growth — has yet to occur, according to an article this month by CNBC.com.
Most economists — 61% — put the probability of a recession at less than 50% in the next 12 months, according to CNBC.com, citing a report from the National Association for Business Economics released this week.
One market strategist and former longtime financial advisor, Rob Isbitts, disagreed.
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