Bank of America CEO Brian Moynihan has announced that the bank no longer predicts a recession in the United States. Speaking on “Face the Nation,” Moynihan stated that the bank had anticipated a recession last year, but those concerns have since dissipated. “Last year, this time, it was a recession,” he said.
“This year we talked about now there’s no recession.”
Bank of America’s latest prediction suggests that the Federal Reserve’s efforts to tame inflation while keeping the U.S. economy afloat are working. Consumer spending has softened, Moynihan said, citing the lender’s vantage point of having a customer base of 60 million. People in July and August spent at a growth rate of about 3% — half the rate it was in 2023, BofA found.
“Consumers have money in their accounts, but they’re depleting a bit. They’re employed and earning money, but if you look at it, they’ve really slowed down,” Moynihan said. The optimistic scenario puts the Fed in the position of working to ensure that its policy moves do not slow the economy too much, the bank chief said.
BofA no longer predicts recession
“We’ve won the war on inflation; it’s come down. It’s not where people want it yet, but we’ve got to be careful that we don’t try to get so perfect that we put us in recession,” Moynihan added, emphasizing that BofA does not believe such an outcome will occur.
However, not all analysts agree with this optimistic view. Some recent reports warn the country is not out of the woods yet. In particular, a disappointing report earlier this month factored into a three-day stock market decline and helped reignite the debate over whether the nation is headed toward a recession.
According to Moynihan, BofA researchers predict “we go to 2% growth, then 1.5% growth over the next six quarters and kind of bump along at that growth rate plus or minus.” Furthermore, the BofA team expects the Fed to cut rates twice this year: first in September and then again in December, with four additional reductions in 2025. BofA holds the view of many, looking to an eventual Fed funds rate of 3% to 3.5%, a notable change from the last 15 years.
People who entered the business world in 2007 and 2008 have not seen this kind of interest rate environment,” Moynihan noted. “We’re getting back to normal, and that will take a while for people to adjust to, both on the corporate, commercial, and consumer sides.”
