Financial institution of America said Wednesday that it believes the U.S. is headed in direction of a light recession in 2023, pushed by “weaker funding and shopper spending.” The agency additionally sees the unemployment fee ticking as much as 5.5%.
“We expect the headwinds of a weaker labor market, greater borrowing prices, tighter credit score requirements, and weaker stability sheets will lead customers to cut back spending briefly and push the saving fee greater,” BofA mentioned in a notice to purchasers.
BofA feels assured that markets will probably be pressured to navigate their means by a restrictive financial coverage stance subsequent yr, which in flip will dampen shopper sentiment.
On the inflation entrance, the financial institution projected that core CPI inflation will ease swiftly all through 2023 as provide chain disruptions repair themselves, inventories enhance and labor market circumstances deteriorate.
“Total, we challenge the year-on -year fee of headline and core CPI to fall to three.2% by 4Q 23.”
In noon buying and selling on Wednesday, the main averages (SP500), (DJI), (COMP.IND), and their mirroring ETFs (NYSEARCA:SPY), (NYSEARCA:VOO), (IVV), (NYSEARCA:DIA), and (NASDAQ:QQQ), have pushed greater forward of the Thanksgiving vacation.
BofA isn’t the one establishment that foresees a recession. Russell Investments is one other agency that’s within the boat that believes the U.S. is headed in direction of a downturn.