U.S. Bancorp Chief Executive Officer Richard Davis, who runs the fifth-largest U.S. lender by deposits, said consumers won’t lead an economic recovery for the first time “in our collective lifetimes.”
Psychology has shifted as declines in housing prices cause people to feel less wealthy, Davis said today at an investor conference sponsored by Barclays Plc. Because of that, consumers will be a “slow catalyst” in the recovery, and businesses will have to cut prices to get people to spend, he said.
“If you think of consumer versus business, who blinks first? It’s always been the consumer,” said Davis, 54. “Consumers are going to be likely to wait this one out.”
Davis hasn’t posted a loss in the six years he’s run the company, using a traditional banking strategy of taking deposits and making loans that he describes as “boring.” The bank’s credit rating was upgraded one level in August by Standard & Poor’s, which said the Minneapolis-based firm has outperformed competitors since 2008’s financial crisis.