Brian Moynihan, chief executive of Bank of America, stuck to his earlier prediction that if the US economy were to slip into a recession, it would be less severe than feared.
“How can a recession not be accompanied by rising unemployment?” Moynihan asked on CBS’ “Face the Nation” on Sunday, referring to Friday’s U.S. jobs report. The 263,000 jobs added in the
The Bank of America chief executive said on Sunday he expects the U.S. economy to contract “only 1%” in the first three quarters of 2023 before returning to positive growth. “It’s a milder recession,” Moynihan said.
Moynihan is more optimistic about the U.S. economy than some of his peers. Last week, the Bank of America CEO predicted a mild U.S. recession on CNN, quipping: “Hurricane season is over now.” (Moynihan referring to Comments from JPMorgan CEO Jamie Dimon in June, who said the U.S. economy was facing a “hurricane.”)
In June, Bank of America’s incoming head of U.S. economics predicted that the U.S. economy could slip into a mild recession by the end of 2022. But consumer spending was strong in September, and Bank of America’s research team pushed back its recession forecast to 2023. “They keep pushing back,” Moynihan joked at the Fortune CEO Initiative Forum last month.
Moynihan’s more upbeat outlook on the U.S. economy contrasted with other pessimistic forecasts.
Nouriel Roubini, a professor at New York University, said in October that he expected a “long and dangerous” recession for the US economy. Roubini is often referred to as “Dr. Doom” for his predictions of the 2007 housing crash.
Last week, Mohamed El-Erian, chief economic adviser to Allianz, wrote in a column for the Financial Times that the bank predicted the economy would be in a “slump”. A short and slight “recession.” El-Erian said he feared they could “repeat the same mistakes that fell into the analytical and behavioral trap of forecasting inflation last year, and then such forecasts are doomed to go terribly wrong”.
A survey by the Financial Times in June showed that two-thirds of U.S. economists believe a recession will come next year. CEOs are also concerned, with 98% of business leaders preparing for a possible recession in the next 12-18 months, according to an October survey by the Conference Board.
But on Sunday, Moynihan defended his more bullish view, pointing to the strength of the U.S. economy as the Fed raises rates.
“The idea was that when the Fed started raising rates, there would be an immediate hit to the economy. That didn’t happen,” Moynihan said.
Other banks are also reconsidering the possibility of a U.S. recession following better-than-expected economic data. Both Goldman Sachs and Morgan Stanley predicted in November that the U.S. could narrowly escape a recession.
The Bank of America CEO did point to some negative indicators, such as weakness in the housing market and slowing consumer spending. But Moynihan said the volatility is proof that the U.S. economy will be more sustainable.
The decline in job vacancies and turnover, in particular, isn’t good news for individual job seekers, Moynihan said, but both “are actually signs of a turnaround in the economy, that the economy is doing well, that the rate of economic growth is picking up. normal”.
Economists at Bank of America predict the unemployment rate will rise to 5.5% by next year, according to a research note published last week. Moynihan said on Sunday that people losing their jobs is “a terrible thing,” but the U.S. has had unemployment this high before. Before the pandemic, the last time the U.S. recorded an unemployment rate of 5.5% was in May 2015.
“We didn’t think things were bad at the time,” Moynihan said. (Fortune Chinese Network)
Translator: Zhong Huiyan-Wang Fang
Bank of America CEO Brian Moynihan is sticking to his earlier predictions that a US recession, if it comes, won’t be as bad as people fear.
“How could you have an unemployment-less recession?” Moynihan asked on CBS News’s Face the Nation program on Sunday, citing the 263,000 new jobs reported in the US jobs report on Friday.
The Bank of America CEO on Sunday said he expects the US economy to contract by “just 1%” for the first three quarters of 2023, then return to positive growth. “This is a more mild recession,” Moynihan said.
Moynihan has been more optimistic about the US economy than some of his peers. Last week, the Bank of America CEO predicted a mild downturn on CNN, quipping “hurricane season is now closed.” (Moynihan was referring to a June comment from JPMorgan CEO Jamie Dimon that the US economy was facing a “hurricane”)
In June, Bank of America’s incoming head of US economics forecast that the US might see a mild recession by the end of 2022. But strong consumer spending in September led Bank of America’s research team to move their recession forecast to 2023. “They keep pushing it out,” Moynihan joked last month at the Fortune CEO Initiative conference.
Moynihan’s more upbeat take on the US’s economic future contrasts sharply to other dire forecasts.
In October, Nouriel Roubini, the New York University professor often dubbed “Dr. Doom” for his predictions about the 2007 housing crash, said he expects the US to face a “long and ugly” recession.
Last week, Mohamed El-Erian, chief economic advisor for Allianz, called out banks predicting a “short and shallow” recession in an op-ed for the Financial Times. El-Erian says he worries that they risk “a repeat of the analytical and behavioral traps that featured in last year’s ill-fated inflation call.”
A June survey from the Financial Times reported that two-thirds of US economists believed a recession would hit next year. CEOs are also worried, with 98% of corporate leaders preparing for a recession over the next 12-18 months, according to an October survey from the Conference Board.
Yet on Sunday, Moynihan defended his more optimistic view by pointing to the US’s strong performance amid Federal Reserve interest rate hikes.
“The belief was when the Fed started raising rates that there would be an immediate snap to the economy,” Moynihan said. “That didn’t happen.”
Other banks are also reconsidering the possibility of a US recession, thanks to better-than-expected economic data. Both Goldman Sachs and Morgan Stanely forecast in November that the US may narrowly escape a recession altogether.
The Bank of America CEO did point to some negative indicators, like a weakening housing market and slowing consumer spending. But Moynihan says the wobbles prove the US economy is becoming more sustainable.
Declining job openings and turnover, in particular, are not good for individual jobseekers, Moynihan says, but they are “actually good signs for the economy in terms of it starting to get into a better situation that it can grow at a more normalized rate. “
Bank of America economists predict that unemployment will increase to 5.5% by next year, according to a research note published last week. People losing their jobs is “a horrible thing to contemplate,” Moynihan said on Sunday, but the US has experienced that rate of joblessness before. Prior to the COVID-19 pandemic, the US most recently recorded a 5.5% unemployment rate in May 2015.
“We didn’t feel horrible then,” Moynihan said.
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