The second biggest bank in the US, Bank of America Corp. expects a moderate recession in the country starting from the second quarter of 2023, head of the bank, Brian Moynihan, told The Barron’s, Report informs.
“We went from a [forecast for a] recession starting at the end of 2022, to the first part of 2023, and now to mid-2023. And so we’ve got a mild recession: second-, third-, fourth-quarter negative, getting back to positive in second-quarter 2024,” he said.
“General American consumers have money in their accounts and the ability to borrow. They’re paying their debts, and [they’re] employed and earning more money. That means a recession is a little hard to understand. [The Federal Reserve] has got to get inflation under control. So, that’s where you get the soft landing. And if it’s plus a half or minus a half [of GDP], that’s not much difference in terms of general economic activity. This isn’t minus 5% or something like that.”
“We have to step back and realize these month-to-month data sets are going to bounce around a little bit. People are going to overread them one way and overread them the other way. But the broad trend is inflation peaking out— [it has] peaked in some areas and not quite peaked in others. That’s good, but that’s also the intended outcome of having an interest rate that moved from nothing up to 5%. And so, the impact’s coming in. The question is, what’s sticky? What’s not sticky?” he added.