Javier Hernandez Bank of America Anticipates Mild Recession Following Fed’s Tightening Measures
According to Bank of America, there is a forecast of a mild recession occurring in the final two quarters of 2023. CEO Brian Moynihan attributes this economic downturn to the tightening actions taken by the U.S. Federal Reserve as a measure to combat inflation, which is expected to raise unemployment rates to approximately 4%.
Bank of America’s CEO Foresees Mild Recession
Bank of America continues to project a mild recession for the U.S. economy, expected to take place later this year. During a recent interview on CBS “Face the Nation,” Brian Moynihan, CEO of Bank of America, discussed this new forecast and provided insights into its underlying reasons.
When questioned about Bank of America’s economic forecast, Moynihan shared the following statement:
“When I was last here, it was towards the end of last year, and we predicted a recession for this year. However, we have now revised our projections. We foresee a mild recession occurring in the third and fourth quarters of this year, extending into the first quarter of the following year.”
Moynihan explained that this recession would be a consequence of the U.S. Federal Reserve’s measures to tighten monetary policy, primarily through increasing interest rates to counteract inflation. He also mentioned that these actions would result in a rise in unemployment to approximately 4% and highlighted that their data indicated a slowdown in consumer spending.
Moynihan’s statements align with the U.S. Federal Reserve’s predictions, as they previously stated in April that the U.S. economy would face challenges later in the year. Some renowned economists, such as Peter Schiff, have presented a more pessimistic outlook, suggesting that the United States might be heading toward a depression worse than the one experienced during the 1930s.
Sluggish Hiring Trends
Moynihan further revealed that Bank of America had slowed down its hiring processes and received similar feedback from other companies adopting the same approach.
In response to questions regarding the hiring slowdown, Moynihan stated:
“Last May, we hired 3,000 individuals. This May, we hired only 700 due to a significant decrease in attrition rates. Consequently, we need to make adjustments to our headcount. Hence, we anticipate a net reduction of 3,000 full-time positions this quarter. It’s important to note that we are not implementing any layoffs.”
A recent survey conducted by Bank of America indicated that its customers were preparing for a potential recession by seeking refuge in cash and divesting from other investment instruments.
We welcome your thoughts on Bank of America’s economic predictions for the United States. Please share your opinions in the comments section below.
Table Of Contents
Frequently Asked Questions (FAQs) about economic recession
What is Bank of America predicting for the U.S. economy?
Bank of America is predicting a mild recession that will occur during the last two quarters of 2023. The CEO, Brian Moynihan, attributes this recession to the tightening actions of the U.S. Federal Reserve in order to combat inflation.
Why does Bank of America believe a recession will happen?
Bank of America believes that the U.S. Federal Reserve’s tightening actions, such as increasing interest rates, will have a negative impact on the economy, leading to a mild recession. These measures are intended to control inflation but may result in increased unemployment and a slowdown in consumer spending.
What are the potential effects of this recession?
According to Bank of America’s predictions, the recession could lead to a rise in unemployment rates, reaching approximately 4%. Additionally, there may be a slowdown in hiring, as seen by Bank of America’s own hiring slowdown, and a decrease in consumer spending.
How does Bank of America’s forecast compare to other predictions?
Bank of America’s forecast aligns with the predictions of the U.S. Federal Reserve, which has also stated that the U.S. economy will face challenges later in the year. However, some economists, like Peter Schiff, have offered a more pessimistic outlook, suggesting a potential depression worse than the one experienced in the 1930s.
How are Bank of America’s customers preparing for a possible recession?
Bank of America’s survey reveals that its customers are preparing for a potential recession by seeking refuge in cash and divesting from other investment instruments. This cautious approach is a response to the anticipated economic downturn.
More about economic recession
- Bank of America
- U.S. Federal Reserve
- CBS “Face the Nation” interview with Brian Moynihan
- Peter Schiff
- Bank of America Hiring Trends
5 comments
Wow, Bank of America is predicting a mild recession? That’s not good news for the economy. I hope they’re wrong!
Bank of America CEO is like, “Yeah, recession is coming, no big deal.” Seriously, why can’t we avoid these economic downturns?
So, the Fed’s tightening actions are supposed to fight inflation, but they’re also causing unemployment to go up? Doesn’t sound like a great trade-off to me.
Bank of America’s hiring slowdown might be a sign of trouble ahead. Are other companies feeling the same way? Time to be cautious with investments.
I’m not convinced about this recession talk. Let’s focus on finding opportunities and staying positive. The economy can surprise us sometimes!