Bank of America CEO Brian Moynihan says the US will enter a recession in the 3rd quarter of this year
- The US will enter a technical recession by the third quarter, according to BofA's Brian Moynihan.
- "It's a very slight recession in the scheme of things. I don't think you'll see a deep recession."
Bank of America CEO Brian Moynihan warned the US will enter a recession this year, though a downturn is unlikely to be severe.
A recession will start in the third quarter then continue through the fourth quarter and into the first quarter of 2024, Moynihan said at The Financial Review's Business Summit on Tuesday, according to Reuters.
"It's a very slight recession in the scheme of things. I don't think you'll see a deep recession," he added. "It will be more of a technical recession than it will be a deep drop in the US."
BofA's forecasters estimate quarterly contractions of 0.5%-1%, Moynihan added.
A technical recession is defined as two straight quarters of negative GDP growth, the but economy isn't considered to be in an official downturn until the National Bureau of Economic Research declares a recession.
For its part, the NBER says its definition of a recession "involves a significant decline in economic activity that is spread across the economy and lasts more than a few months."
The US briefly entered a technical recession last year, but exited in the third quarter of 2022 as economic activity rebounded. In the fourth quarter, the economy continued to expand.
Markets have grown more optimistic amid robust economic data, with job numbers and consumer spending holding strong despite the Fed's aggressive rate hikes.
But as the economy contracts, Moynihan said Bank of America expects the Fed to begin cutting rates in the second quarter of 2024.
Central bankers have raised interest rates 450 basis points over the past year, a level of tightening that some commentators have warned could send the economy into a recession. Markets are expecting another 25- to 50-basis-point hike in March as inflation remains sticky.