Bank Of America CEO Predicts Mild Recession In The US Economy
- Bank of America’s CEO expects a mild recession in the US due to stimulus and research team consistency.
- Low unemployment and easing wage inflation may prevent a deep recession. Bank of America reported Q1 earnings of $14.4B.
Bank of America CEO predicts a mild recession due to stimulus and research team consistency. Low unemployment and easing wage inflation may help prevent a deep recession.
Bank of America CEO Brian Moynihan recently predicted a slight recession in the United States. However, he also believes that it will be a mild recession, mainly due to the amount of stimulus paid to people and the money they still have left over. Despite commercial customers being more careful in their spending, Moynihan does not see the activity on the consumer side slowing down at a pace that would indicate a deep recession.
According to Bank of America CEO Brian Moynihan, his research team has consistently predicted a mild downturn due to the Federal Reserve’s aggressive rate hikes. Over the past year, the central bank has raised its benchmark interest rate nine times, totaling 4.75 percentage points, the fastest tightening pace since the early 1980s. Bank of America projects that annualized GDP will contract by half to 1 percentage point in the next three quarters before returning to positive growth.
Despite the mild recession outlook, Moynihan is optimistic about the low unemployment rate and easing wage inflation, which should prevent a deep recession. Bank of America reported first-quarter earnings and revenue that exceeded expectations due to higher interest rates. The bank’s net interest income, which is the difference between what it makes lending minus what it pays out to customers, jumped 25% to $14.4 billion during the quarter from a year earlier.
Moynihan stated that Bank of America’s stress scenarios are always less severe than others due to how the company was built to handle problems, including the pandemic. Overall, Moynihan’s insights suggest that even though the US may face a slight recession soon, the economy should remain relatively stable and continue to grow in the future.
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