The global economy will struggle more than people now think, as the credit crunch spreads beyond housing and financials, Gerald Hassell, Bank of New York Mellon president, told "Squawk Box Europe" Friday.
"We’re seeing the early signs of the traditional downturn," Hassell said. "I do think it’s going to be a very tough environment for all of us here."
Initially, the credit crunch had hit only the real estate sector, but now it is spreading, affecting credit cards and the consumer in general. Meanwhile the high price of oil and food is squeezing other areas such as clothing and autos, he said.
"I’m fairly pessimistic … we’re in a prolonged period of slowdown here," Hassell said, adding that it is impossible to forecast when the economy will start to pick up.
The Federal Reserve is likely to focus on helping the economy and will probably let the dollar "drift where it wants to drift," he said.
But another crisis like the Bear Stearns failure is unlikely, Hassell said.
"I think the market has already indicated that most of the major banks are too big to fail."