Ameriprise CEO: A 'mild recession' is likely

A small recession could be on the horizon, the CEO of Ameriprise Financial told investors Wednesday, adding that the Federal Reserve and other central banks continue to play "catch up" by raising interest rates to arrest inflation.

"It will lead to a slowing of the U.S. and European economies and, at this juncture, it looks more like we're heading for a mild recession," Jim Cracchiolo said on a third-quarter earnings calls for the Minneapolis-based investment services firm. "Therefore, I expect there will be more volatility ahead."

His comments were in line with the growing sentiment in the financial industry, and economists broadly, that the chances for a recession in the U.S. are going up.

A survey released earlier this week by the National Association for Business Economics showed that about two-thirds of respondents believe the U.S. will be a in recession in the next 12 months or that the country is already in one.

Earlier this month, Andy Cecere, CEO of Minneapolis-based U.S. Bancorp, said on his company's third-quarter earnings call that he would not be surprised to see an "economic slowdown." He did not use the word recession, however.

U.S. Bank and other big banks have been shoring up their reserves for bad loans to account for higher loan growth and the possibility of a downturn.

Cracchiolo added that investors are feeling sidelined amid a volatile environment in which stocks and bonds have been declining, inflation remains high and "sticky," and geopolitical risk is elevated.

Its profits declined 47% to $548 million. Adjusted for non-recurring costs and an annual update to insurance and annuity valuation assumptions, operating earnings rose 3%.

Total net revenue grew 20% in the third quarter to $3.5 billion.

Cracchiolo noted that the company saw strong client inflows in wealth management and growth in its bank amid the rise in interest rates. That helped offset the steep market declines and the strength of the dollar, which affected the foreign exchange rate in its European business, that dented its asset management business.

Total client net flows were up 11% to $11.2 billion as advisors helped clients defensively position their portfolios.

Total assets under management dropped 6% to $546 billion amid the turbulent markets.