According to Bank of America’s CEO, Brian Moynihan, a mild recession is projected to occur in the final two quarters of 2023. This economic downturn is expected to result from the U.S. Federal Reserve’s actions to combat inflation by tightening monetary policy, potentially leading to a 4% increase in unemployment.
Bank of America’s CEO Forecasts a Mild Recession
Bank of America maintains its prediction of a mild recession in the U.S. economy, expected to take place later this year. In a recent interview on CBS “Face the Nation,” Brian Moynihan, CEO of Bank of America, discussed this new forecast and its underlying reasons.
When questioned about Bank of America’s economic outlook, Moynihan stated:
“When I was here last time, we predicted a recession for this year. However, we have shifted our timeline to the third and fourth quarters of this year, extending into the first quarter of the following year, projecting a mild recession.”
Moynihan explained that this recession would be a consequence of the U.S. Federal Reserve’s tightening actions, characterized by interest rate increases aimed at curbing inflation. He further mentioned that unemployment is expected to rise to 4% as a result of these measures, and their data indicates a slowdown in consumer spending.
Moynihan’s statements align with the predictions made by the U.S. Federal Reserve, which had previously stated that the U.S. economy would experience a setback later this year. Notably, some economists, including Peter Schiff, have painted a more pessimistic picture, warning of a potential depression surpassing the severity of the 1930s.
Reduced Hiring Activity
Moynihan also acknowledged that Bank of America had slowed down its hiring process, noting that other companies had adopted a similar approach.
“In May of last year, we hired 3,000 individuals. However, this May, we only hired 700 individuals due to a significant decline in attrition rates. Consequently, we need to adjust our workforce accordingly, leading to a reduction of 3,000 full-time employees this quarter. It is essential to emphasize that we are not conducting any layoffs.”
A recent survey conducted by Bank of America revealed that its customers were preparing for a possible recession by seeking the safety of cash and divesting from other investment instruments simultaneously.
Frequently Asked Questions (FAQs) about mild recession
What is Bank of America predicting for the U.S. economy?
Bank of America is predicting a mild recession in the U.S. economy during the last two quarters of 2023. This projection is based on the tightening actions taken by the U.S. Federal Reserve to combat inflation.
What are the reasons behind Bank of America’s recession prediction?
How will the Federal Reserve’s actions affect unemployment?
According to Bank of America’s CEO, Brian Moynihan, the tightening actions by the U.S. Federal Reserve are likely to cause an increase in unemployment. They anticipate that the unemployment rate could rise to 4% as a result of these measures.
What is the hiring situation at Bank of America in light of the recession prediction?
Bank of America has reported a slowdown in their hiring processes. CEO Brian Moynihan stated that they have reduced their hiring and are not conducting any layoffs. The bank is adjusting its workforce due to slower attrition rates.
Are customers preparing for the possible recession?
Bank of America’s survey indicates that its customers are taking precautionary measures in anticipation of a possible recession. They are seeking refuge in cash and divesting from other investment instruments as a precautionary step.
More about mild recession
- Bank of America
- U.S. Federal Reserve
- CBS “Face the Nation” interview
- Peter Schiff
- Bank of America’s hiring slowdown
- Bank of America’s customer survey