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

“How may you’ve got 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 mentioned he expects the U.S. financial system to contract by “simply 1%” for the primary three quarters of 2023, then return to optimistic progress. “This can be a extra delicate recession,” Moynihan mentioned. 

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 going through 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 robust client spending in September led Financial institution of America’s analysis workforce to maneuver their recession forecast to 2023. “They preserve 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 typically dubbed “Dr. Doom” for his predictions concerning the 2007 housing crash, mentioned 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 “brief and shallow” recession in an op-ed for the Monetary Occasions. El-Erian says he worries that they threat “a repeat of the analytical and behavioral traps that featured in final 12 months’s ill-fated inflation name.”

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

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

“The idea was when the Fed began elevating charges that there can be a direct snap to the financial system,” Moynihan mentioned. “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 destructive indicators, like a weakening housing market and slowing client spending. However Moynihan says the wobbles show the U.S. financial system is changing into extra sustainable.

Declining job openings and turnover, particularly, usually are not good for particular person jobseekers, Moynihan says, however they’re “really good indicators for the financial system by way of it beginning to get into a greater scenario that it could develop at a extra normalized price.” 

Financial institution of America economists predict that unemployment will enhance to five.5% by subsequent 12 months, in accordance a analysis be aware revealed final week. Folks shedding their jobs is “a horrible factor to ponder,” Moynihan mentioned on Sunday, however the U.S. has skilled that price of joblessness earlier than. Previous to the COVID-19 pandemic, the U.S. most lately recorded a 5.5% unemployment price in Might 2015.

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

Our new weekly Impression Report e-newsletter will look at how ESG information and developments are shaping the roles and duties of at the moment’s executives—and the way they will finest navigate these challenges. Subscribe right here.