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Citi CEO Corbat: US economy ‘performed better’ than expected amid COVID

Aarthi Swaminathan
·3 min read

The U.S. may be in a recession with millions of people losing their jobs, but there’s a silver lining, according to Citigroup (C) CEO Michael Corbat.

“The U.S. economy has actually performed better than expectations,” Corbat told Yahoo Finance Editor-in-Chief Andy Serwer, during an interview that aired as part of the All Markets Summit. “If we take a look at what you would think would be happening around GDP, around unemployment, around the challenges of individuals, families, small business, bigger business.”

The CEO noted that “programs that have been put in place by the Fed ... coming out of Treasury, have served us well.”

See also: Citi ‘will be prepared for contested 2020 election’: CEO Michael Corbat

Indeed, Treasury Secretary Steven Mnuchin worked with Congress in March to pass the $2.2 trillion CARES Act, though lawmakers have been unable to agree on a new round of stimulus. For its part, the Federal Reserve has also been aggressive in responding to the coronavirus by lowering rates, supporting credit flow in the economy. Still, a New York Times analysis out last week found that the Fed has loaned out just $20 billion of $454 billion earmarked for emergency lending programs.

Michael Corbat, CEO of Citigroup gestures during a panel discussion at the Swiss-American Chamber of Commerce in Zurich, Switzerland January 18, 2019.  REUTERS/Arnd WIegmann
Michael Corbat, CEO of Citigroup gestures during a panel discussion at the Swiss-American Chamber of Commerce in Zurich, Switzerland January 18, 2019. REUTERS/Arnd WIegmann

‘We all have optimism’

The U.S. government has arguably had mixed results in its efforts to boost the U.S. economy during the downturn, which the IMF’s chief economist called far worse than the financial crisis of 2008. The unemployment rate spiked to 14.7% in April and has since come down to 7.9% — but that’s still far higher than February of this year, when it was just 3.5%.

Meanwhile, GDP plunged at an annual rate of 31.7% in the second quarter, though economists polled by the Wall Street Journal last month expect GDP to bounce back in the third quarter and increase at an annualized rate of 23.9%.

Big banks, including Citigroup, are also optimistic about a rebound, according to their recent earnings reports, as Yahoo Finance’s Brian Cheung reported earlier this month. Citigroup management, in particular, described the third quarter as a time of “stabilization.”

Read more: Citi CEO Corbat: Negative interest rates create ‘strange’ bubbles

Nevertheless, given that “what the forward trajectory looks like” with the virus, Corbat added, he’s watching the data to see if there’s an uptick in COVID-19 cases as the winter approaches — which is generally known as flu season — for guidance as to how the economic recovery will play out.

“We want to see that curve turn and bend, and start to go back down,” Corbat said. “And clearly, I think we all have optimism and there's a lot of work going on in terms of the vaccine and the antivirus out there. ... And hopefully ... that's not too far in the future.”

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Aarthi is a reporter for Yahoo Finance. She can be reached at aarthi@yahoofinance.com. Follow her on Twitter @aarthiswami.

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