american bank CEO Brian Moynihan is sticking to his earlier predictions that a recession in the US, if it happens, won’t be as bad as people fear.
“How can you have a unemployment-less recession?” Moynihan asked on CBS News Facing the Motherland Sunday program, quote 263,000 new jobs reported in the US jobs report on Friday.
The Bank of America CEO on Sunday said he expected the US economy to shrink “just 1%” in the first three quarters of 2023, then return to positive growth. “This is a milder recession,” Moynihan said.
Moynihan is more optimistic about the US economy than some of his peers. Last week, the CEO of Bank of America predict a slight downturn on CNN, quipping “the hurricane season is now over.” (Moynihan was referring to a June remark by JPMorgan CEO Jamie Dimon that the US economy had to face a storm”)
In June, Bank of America’s head of incoming US economics forecast that the US could see a mild recession later this year. end of 2022. But Strong consumer spending in September prompted the Bank of America research team to move its recession forecast to 2023. “They keep pushing it out,” Moynihan joked last month at a press conference. Fortune CEO Initiative conference.
Moynihan’s more optimistic view of the economic future of the United States stands in stark contrast to other dire projections.
In October, Nouriel Roubini, a New York University professor often referred to as “Dr. Doom” for his predictions of the 2007 housing crash, said he expects the United States to face “long and uglyeconomic depression.
Last week, Mohamed El-Erian, chief economic adviser to Allianz, call out banks predict a “short and shallow” recession in an op-ed for Financial Times. El-Erian said he worries they risk “repeating the behavioral and analytical traps that emerged during last year’s bad inflation call.”
One June survey are from Financial Times reported that two-thirds of US economists believe a recession will occur next year. CEOs are also worried, with 98% of business leaders preparing for a recession in the next 12-18 months, according to a report October survey from the Board of Directors.
On Sunday, however, Moynihan defended his more upbeat view by pointing to strong US performance amid interest rate hikes by the Federal Reserve.
“The belief is that when the Fed starts to raise rates, the economy will be hit immediately,” Moynihan said. “That didn’t happen.”
Other banks are also reconsidering the possibility of a recession in the US, thanks to better-than-expected economic data. Both Goldman book and Morgan Stanely forecast in November that the United States could narrowly exit the recession entirely.
The Bank of America CEO pointed to a number of negative indicators, such as a weakening housing market and slowing consumer spending. But Moynihan says the wobble shows the US economy is becoming more sustainable.
Falling job opportunities and revenue, in particular, isn’t good for individual job seekers, Moynihan said, but it’s “a really good sign for the economy as it starts to get into a better shape to stay in place,” Moynihan said. may grow at a more normalized rate. ”
Bank of America economists predict that unemployment will get a raise to 5.5% next year, according to a research note published last week. Moynihan said Sunday that people losing their jobs is “a terrible thing to think about,” but that the United States has experienced that unemployment rate before. Before the COVID-19 pandemic, the US most recently recorded an unemployment rate of 5.5% in May 2015.
“We didn’t feel terrible at the time,” Moynihan said.
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