Financial institution of America CEO: jobs report helps ‘delicate’ recession prediction

“How might you’ve an unemployment-less recession?” Moynihan requested on CBS Information’s Face the Nation program on Sunday, citing the 263,000 new jobs reported within the U.S. jobs report on Friday.

The Financial institution of America CEO on Sunday stated he expects the U.S. financial system to contract by “simply 1%” for the primary three quarters of 2023, then return to constructive development. “It is a extra delicate recession,” Moynihan stated. 

Moynihan has been extra optimistic concerning the U.S. financial system than a few of his friends. Final week, the Financial institution of America CEO predicted a light downturn on CNN, quipping “hurricane season is now closed.” (Moynihan was referring to a June remark from JPMorgan CEO Jamie Dimon that the U.S. financial system was dealing with a “hurricane”)

In June, Financial institution of America’s incoming head of U.S. economics forecast that the U.S. would possibly see a light recession by the tip of 2022. However sturdy shopper spending in September led Financial institution of America’s analysis crew to maneuver their recession forecast to 2023. “They maintain pushing it out,” Moynihan joked final month on the Fortune CEO Initiative convention.

Moynihan’s extra upbeat tackle the U.S.’s financial future contrasts sharply to different dire forecasts.

In October, Nouriel Roubini, the New York College professor usually dubbed “Dr. Doom” for his predictions concerning the 2007 housing crash, stated he expects the U.S. to face a “lengthy and ugly” recession. 

Final week, Mohamed El-Erian, chief financial advisor for Allianz, known as out banks predicting a “quick and shallow” recession in an op-ed for the Monetary Instances. El-Erian says he worries that they threat “a repeat of the analytical and behavioral traps that featured in final yr’s ill-fated inflation name.”

A June survey from the Monetary Instances reported that two-thirds of U.S. economists believed a recession would hit subsequent yr. CEOs are additionally anxious, with 98% of company leaders getting ready for a recession over the following 12-18 months, in accordance with an October survey from the Convention Board.

But on Sunday, Moynihan defended his extra optimistic view by pointing to the U.S.’s sturdy efficiency amid Federal Reserve rate of interest hikes. 

“The idea was when the Fed began elevating charges that there could be an instantaneous snap to the financial system,” Moynihan stated. “That didn’t occur.” 

Different banks are additionally reconsidering the potential for a U.S. recession, due to better-than-expected financial knowledge. Each Goldman Sachs and Morgan Stanely forecast in November that the U.S. might narrowly escape a recession altogether.

The Financial institution of America CEO did level to some damaging indicators, like a weakening housing market and slowing shopper spending. However Moynihan says the wobbles show the U.S. financial system is turning into extra sustainable.

Declining job openings and turnover, specifically, aren’t good for particular person jobseekers, Moynihan says, however they’re “truly good indicators for the financial system by way of it beginning to get into a greater scenario that it might develop at a extra normalized charge.” 

Financial institution of America economists predict that unemployment will improve to five.5% by subsequent yr, in accordance a analysis be aware revealed final week. Folks shedding their jobs is “a horrible factor to ponder,” Moynihan stated on Sunday, however the U.S. has skilled that charge of joblessness earlier than. Previous to the COVID-19 pandemic, the U.S. most not too long ago recorded a 5.5% unemployment charge in Could 2015.

“We didn’t really feel horrible then,” Moynihan stated.

Our new weekly Impression Report publication will look at how ESG information and traits are shaping the roles and tasks of right now’s executives—and the way they’ll finest navigate these challenges. Subscribe right here.