Although an apparent improvement in the economy of the United States, Keith Banks, president of Bank of America, is still firm in his forecast of an “inevitable recession” by 2023.
“Bank of America Global Research is still forecasting a recession by 2023. Until that happens, they have to get ahead of the cost quickly,” Banks said in an interview with FoxBusiness.
Banks assured that the signals that have been given so far are not yet “sufficient” to rule out a recession, so he considers that as the year progresses there will be an additional weakness in the labor area.
His comments come as the Federal Reserve prepares to speak Tuesday after raising interest rates by a quarter point, and companies including Disney, Uber, Lyft, Royal Caribbean, Spirit Airlines and others prepare to post earnings. of the fourth quarter of 2022.
Banks also assured that as long as the Federal Reserve continues to raise interest rates, costs will start to grow faster than revenuenone of which is good for the bottom line.
There is much more liquidity in the market than people appreciate, said the executive, noting that companies and consumers “they are still full of cash”.
“There’s just a lot of liquidity out there. They have to further reduce that liquidity. We think they will,” Banks said, referring to the Fed.
“Then as that starts to happen, as the Fed continues to tighten, it’s hard not to envision probably two hikes. That continues to be our forecast, ”he added.
In addition to Bank of America, several Wall Street banks are forecasting a recession this year, including Goldman Sachs, Wells Fargo and Deutsche Bankalthough they remain unsure of its seriousness.
Banks brace for a recession as persistent high inflation has pushed the Federal Reserve to raise interest rates at the fastest pace since the 1980swhich threatens to reduce consumer and business spending by increasing borrowing costs.
Policymakers have already approved seven out-of-the-box rate increases in 2022, raising the fed funds rate to a range of 4.25% to 4.5%, the highest level since 2007, and forecast a peak rate of around 5%.
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Source: La Opinion
