Recession seems to be on the way for the US economy in 2023, almost like an inevitable fate, considered the CEO of Bank of AmericaBrian Moynihan.
During a call with investors, Moynihan acknowledged that the bank is prepared and continues to adjust for a recession scenario, which he said is almost certain to occur. will happen sometime in 2023.
However, the executive director of one of the largest banks in the United States clarified that the recession that his analysts estimate It will not be deep, but “mild”which has coincided with the projections of other banks in the country.
“Our base case scenario contemplates a mild recession, but we also add to that a downside scenario, and what this results in is that 95% of our reserve methodology is weighted towards a recessionary environment in 2023”, assured the CEO. from Bank of America during the call this week.
The US economy has been around recessive scenarios since the first half of 2022, when it added two consecutive quarters with a decrease in the Gross Domestic Product (GDP) and the country began to talk about a technical recession.
However, during the second semester, the economy had a more dynamic behaviorwith an increase in consumption and a drop in inflation, after it reached a peak in June 2022, reaching 9.1% in its annual measurement.
In the midst of this scenario, the labor market has remained more dynamic than the Federal Reserve (Fed) would like, with solid growth in job creation and historically low unemployment rates.
However, Bank of America projections consider that in the recessive scenario they expect, jobs will drop this year and will increase the unemployment rate up to 5.5% in a pessimistic scenario.
According to Moynihan, it is very likely that the unemployment rate will remain at 5% on average throughout 2024 and until the end of 2024.
This scenario is more in line with the wishes of the Fed, which has budgeted for a rise in the unemployment rate and around two million lost jobs as part of the collateral damage of returning inflation to the 2% target.
Just a few days ago, Moody’s projected that the economy would fall into a “slow” recession this year, with a cooling economy, but with a chance to avoid a prolonged recession.
However, Moody’s believes that, although there will be a rise in unemployment, the rate will not exceed 4.2% by the end of this year.
You may also like:
– Biden applauds that an inflation gauge fell for the first time in more than two years
– According to the New York Fed, inflation sentiment falls to its lowest level since 2021, a good sign
– The job market in the US healthy, but with signs of slowdown, according to BLS