The Federal Reserve acted late and aggressively in trying to tackle inflation.
Rapid interest hikes have led to the economy teetering on what experts believe is a looming recession. Still, Bank of America warns that the impact will be further reaching than just the economy.
They believe it will cost jobs – and lots of them.
Charts published by Bank of America suggest payrolls will start shrinking early next year, translating to about 175K jobs lost per month during the first quarter of 2023.
BoA’s head of US economics, Michael Gapen, told CNN, “The premise is a harder landing rather than a softer one. We are looking for a recession to begin in the first half of next year.”
They also predict that unemployment will peak around 5.5%, compared to the Fed’s estimate of 4.4%.
Gapon suggested that people expect around six months of weakness in the labor market.
But even if it sounds like doom and gloom, Gapon’s news wasn’t all bad – after all, 5.5% is still well below the 15% rate of April 2020 – and they expect a “mild recession.”