Brian Moynihan, chief govt officer of Financial institution of America Corp., throughout a panel session on company ESG requirements on the World Financial Discussion board in Davos, Switzerland, on Wednesday, Jan. 18, 2023.
Bloomberg | Bloomberg | Getty Pictures
Financial institution of America CEO Brian Moynihan mentioned Tuesday he sees solely a slight recession hitting the U.S. as shoppers stay in stable form.
“Every thing factors to a comparatively gentle recession given the quantity of stimulus that was paid to individuals and the cash they’ve left over,” Moynihan mentioned on the financial institution’s quarterly earnings name. “On the finish of the day, we do not see the exercise on the buyer aspect slowing at a tempo that may point out that, however we’d see business clients are being extra cautious.”
Moynihan mentioned that Financial institution of America’s analysis workforce has been constant in calling for a gentle downturn in gentle of the Federal Reserve’s aggressive charge hikes. The central financial institution has raised its benchmark rate of interest 9 occasions over the previous yr for a complete of 4.75 share factors, the quickest tempo of tightening for the reason that early Nineteen Eighties.
The financial institution is predicting annualized GDP contraction within the vary of half to 1 share level within the subsequent three quarters earlier than going again to optimistic progress, he mentioned.
Moynihan took solace in a low unemployment charge and easing wage inflation, which ought to forestall the financial system from tipping right into a deep recession.
“The truth that unemployment continues to be 3.5% [indicates] full employment-plus. After which the wage progress is slowing and tipping over,” he mentioned. “So the indicators of inflation are tipping down and it is nonetheless there however that interprets into comparatively good exercise so we see a slight recession and we’ll see what occurs.”
Financial institution of America on Tuesday reported first-quarter earnings and income that topped expectations on the again of upper rates of interest. The financial institution mentioned its web curiosity revenue — what it makes lending minus what it pays out to clients — jumped 25% to $14.4 billion throughout the quarter from a yr earlier.
“Our stress eventualities are at all times lower than anyone else’s due to how we constructed the corporate to undergo issues together with the pandemic,” Moynihan mentioned.
