Warning issued for US economy

Bank of America expects a technical recession by the third quarter

The US is facing an economic downturn that could start in the third quarter of 2023 and continue into the first quarter of 2024, Bank of America’s (BoA) chief executive, Brian Moynihan, has warned.

Speaking at the Financial Review’s Business Summit on Tuesday, he said that the downturn would not be deep, and projected interest rates to start falling in the second quarter of next year.

“It’s a very slight recession in the scheme of things. I don’t think you’ll see a deep recession,” Moynihan was quoted as saying by Reuters. “It will be more of a technical recession than it will be a deep drop in the US,” he specified.

A ‘technical recession’ means that there have been two consecutive quarters of negative growth in real GDP.

Moynihan also stated that the Wall Street bank’s forecasters estimate quarterly contractions of 0.5%-1%.

READ MORE: Worst-ever economic crash coming – Nouriel Roubini

For the past year, the US Federal Reserve has made a series of interest rate hikes aimed at cooling down record inflation. In February, the regulator approved a quarter-point interest rate increase, which is the smallest one in several months, as the pace of consumer price growth has reportedly slowed.

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