The CEO of one of many nation’s largest banks is getting ready for an financial downturn in 2023. However he’s additionally hopeful that the probably recession will likely be transient and “gentle.”
Financial institution of America
(BAC) CEO Brian Moynihan stated in an unique interview with Poppy Harlow on “CNN This Morning” Tuesday that there’s a lot of uncertainty within the international economic system as a result of potential US freight railroad strike, Russia’s warfare with Ukraine and Covid shutdowns in China.
So an financial pullback shouldn’t be a significant shock. However Moynihan instructed Harlow that the worst-case fears for the economic system might not materialize — due to the continued resilience of American customers.
“That was predicted to occur earlier this yr. There was going to be an actual slowdown,” Moynihan stated. “The Fed was going to boost charges and it’s all pushed out largely due to the US shopper.”
Moynihan’s feedback concerning the economic system are decidedly extra bullish than a few of his friends.
(JPM) CEO Jamie Dimon stated earlier this summer season that People ought to brace for an financial “hurricane.” And Goldman Sachs
(GS) CEO David Solomon instructed Harlow in July that there’s a “good likelihood” the US has but to succeed in peak inflation.
Nonetheless, Moynihan is anxious that there might be extra robust occasions forward for the housing market. Mortgage charges have skyrocketed this yr as a result of Federal Reserve’s collection of aggressive rate of interest hikes. That has made it tough — if not inconceivable — for a lot of youthful People to purchase a primary house.
“That is the hardest factor. You must decelerate the economic system. You must decelerate inflation. And the best way you do that’s elevating rates of interest,” Moynihan stated. “The supposed final result of [the Fed’s] insurance policies doesn’t really feel good if you end up making an attempt to purchase a house.”
Moynihan instructed Harlow that there might be two years of ache within the housing market earlier than exercise returns to regular.
However regardless of worries concerning the housing market, Moynihan stated he’s nonetheless optimistic that the US economic system will proceed to guide the worldwide restoration, particularly given considerations about China’s current Covid outbreak and the intensifying protests over the nation’s strict lockdown insurance policies.
“I believe our economic system is holding on higher than the remainder of the world,” he stated.