In a recent interview on CBS "Face the Nation," Brian Moynihan, CEO of Bank of America, shared his prediction of a forthcoming mild recession in the United States. The anticipation is that this economic downturn will occur during the latter half of 2023. Moynihan attributed this projection to the actions taken by the U.S. Federal Reserve in response to the persistent threat of inflation. As a result of these measures, the tightening of monetary policy is expected to cause unemployment rates to rise, reaching approximately 4%.
Moynihan expounded on Bank of America's economic forecast, clarifying, "When I was last here at the end of last year, we initially predicted a recession for this year. However, we have revised our timeline. The recession is now projected to take place in the third and fourth quarters of this year, extending into the first quarter of the following year. It is crucial to note that we anticipate this recession to be relatively mild."
The CEO emphasized that the U.S. Federal Reserve's tightening actions, particularly the increase in interest rates, have been implemented with the aim of curbing inflationary pressures. Moynihan stressed that the anticipated rise in unemployment is a direct consequence of these measures, which, according to Bank of America's data, are already slowing down consumer spending.
These remarks align with the U.S. Federal Reserve's own predictions, which were announced in April and indicated that the nation's economy would experience a setback later this year. While Bank of America's projections indicate a relatively mild recession, other notable economists, such as Peter Schiff, have offered more pessimistic viewpoints. Schiff has raised concerns that the United States may be heading towards a depression worse than the one endured during the 1930s.
Additionally, Moynihan revealed that Bank of America has implemented a hiring slowdown within its organization, citing similar trends among other companies. When questioned about this adjustment, he explained, "Last May, we hired 3,000 individuals. However, this May, the number decreased to 700 as the attrition rate significantly slowed down. Consequently, we are planning to reduce our full-time headcount by 3,000 in the upcoming quarter. It is important to note that these measures do not involve layoffs."
Furthermore, a recent survey conducted by Bank of America unveiled that its customers are taking proactive measures in anticipation of a possible recession. The study indicated that individuals are increasingly seeking refuge in cash, while simultaneously abandoning other investment instruments.
As Bank of America continues to analyze economic indicators and closely monitor the Federal Reserve's actions, the financial institution remains committed to providing valuable insights to its clients and stakeholders.
