When asked about the effectiveness of Bidenomics on this week’s episode of “CNN This Morning,” Bank of America chief executive officer Brian Moynihan said that following all of the pandemic stimulus, “you are currently facing a situation in which inflation must be fought” and that the bank is forecasting a recession beginning in the first half of 2024. Moynihan added that it will require “all of this year, all of the year to come,” and even into 2025 to bring inflation down to the Fed’s goal percent.
“Do you believe that Bidenomics—this has become a new term—is working for the majority of Americans?”
“I think, if you look around, the U.S. has been continuously fighting inflation,” Moynihan said. “Therefore, following the pandemic, you now have a scenario where inflation needs to be battled due to the amount of fiscal stimulus plus monetary stimulus, — the lower rates and the funds — that the government sent out to balance the impact of the COVID-19 epidemic. Thus, prices have increased. So, based on our predictions, a recession will commence in the first half of next year. It’s a slight recession, which we really pushed from the later part of this year to the early half of next year. And despite the fact that there are plenty of jobs available and high employment rates, pay growth is still robust, inflation is still higher than it ought to be. The Fed has the power to lower those rates, so there will be some colliding interests. It’s interesting to note that signs of a slowdown are beginning to emerge. Our consumer spending demonstrates this slowdown in behavior, which is both good and negative. It’s good because the Fed needs to see that inflation is under control. Not good because it does increase the likelihood that a moderate recession will occur.”
“Our projection is for two-quarters of negative growth in GDP, plus or minus 1%, plus or minus 0.5%,” he continued. Not a significant decline. “It won’t be severe. And as a result, the unemployment rate will increase; we expect it to reach the upper fours or about 5%. But it’s sort of fascinating since we previously believed that full employment was at a 4.5% rate.”
In addition, Moynihan said that “some sectors of inflation had ‘tipped down.’ However, there are certain locations where it may not be tipped down to the desired level. And because of this, we believe it will take them the entirety of this year, the entirety of next year, until the year 25, before they achieve their long-term inflation objectives.”