BlackRock CEO Larry Fink is a legendary presence on Wall Street, but in his 50 years on the job, he's "never" seen as much fear from consumers and businesses alike as he is at the moment.
The chairman of BlackRock, which manages more than $9 trillion in assets, says the global economy is missing hope — an ingredient he says is essential for any financial outlook.
Speaking at the Berlin Global Dialogue Forum this week, Fink said he was an "optimist," a trait the asset management firm holds at its core.
However Fink feels he's alone in his positivity, explaining: "The biggest issue for me — and I say this to every governmental leader I see worldwide — what the world is missing today is hope.
"I see more fear than any time in my business career. I'm a long-term optimist, and we built BlackRock on optimism."
There are many reasons for businesses to be concerned about the state of the economy, Fink acknowledged, from changes in labor supply and increasingly high wages. Yet such factors shouldn't impact outlook in the long run: "businesses adapt," he reasoned.
However, he questioned why, in a sector seemingly built on optimism, there was such a lack of hope in the market at the moment.
"[BlackRoc] is the largest retirement manager in the world," Fink explained. "Why on Earth would anybody ever put their savings into something that may have a 30-year outcome? That is optimism.
"If you're not optimistic that 30 years hence is a better outcome, you're going to keep all your money in a bank."
Consumers are also faltering
Economists have long warned that the seemingly unshakeable consumer will one day lose their nerve.
Wharton professor Jeremy Siegel wrote earlier this year that 'YOLO spenders' were propping up the U.S. economy, splurging the last of their Covid cash in a summer spree.
Likewise, the Bank of America warned that as the Fed attempted to wrestle inflation under control consumers would have to be pushed to the "point of pain" in order to stop contributing to price increases.
The latest data for July may illustrate Siegel's point. According to the Bureau of Economic Analysis, consumer spending increased 0.8% in July 2023, up from 0.6% the month before.
On a global scale, Fink is convinced consumers are battening down the hatches. He highlighted he believes Chinese consumers are a "great example of this fear."
Before the COVID pandemic, consumers were saving 35% of their disposable income — since then that has increased to 50%.
"Now they do that because there's no safety nets of healthcare, no safety nets of retirement, one child families, all these dynamic issues," he said. "That's fear ... they're frightened."
And it's on institutions to answer those fears.
"The biggest issue is that if we as business leaders, if we as political leaders, don't provide more certainty and more hope, this is what causes recessions, this is what causes pull back," Fink added.
A hopeful President?
But just how far from the front Fink would like to lead his hopeful charge remains to be seen.
The 70-year-old was asked like his Wall Street peer, JPMorgan Chase CEO Jamie Dimon, whether or not he'd ever consider a bid for the White House.
"I'm too old," he joked — a reflection on the age of President Biden, aged 80, and former President and election hopeful, 77-year-old Donald Trump.
"We are going to have many political candidates who provide a lot of fear, unfortunately," Fink said. "I think the political winner is the person who provides the most hope for the future."
