The American economy is likely to be in a technical recession starting in the third quarter, but the recession should not be deep. This opinion was expressed by the Chief Executive Officer of Bank of America Brian Moynihan.
"US GDP is likely to shrink for three consecutive quarters led by a corporate slowdown," Moynihan said, adding that the Fed may move to lower interest rates in mid-2024.
"According to our baseline forecast, the recession in the US will begin in the third quarter of 2023 and continue until the first quarter of 2024, with GDP likely to shrink by 0.5%-1% in quarterly terms. Thus, the recession should not be deep," Moynihan said.
"I think you're going to see a slowdown which frankly a lot of people are not going to see that much of. It will be more of a technical recession than it will be a deep drop in the U.S.," the Bank of America CEO summed up.
The U.S. Commerce Department said last month that the U.S. economy expanded less than initially estimated in the fourth quarter of 2022, as a downward revision to consumer spending that was partly offset by an upward revision to nonresidential fixed investment. In addition, imports, which are a subtraction in the calculation of GDP, were revised upwardly. According to the second estimate, the GDP grew at an annual rate of 2.7% in the fourth quarter, below the 2.9% expansion reported in the advance estimate. Economists had predicted the growth rate to remain unrevised at 2.9%.