Bank of America recently warned its customers that the United States economy will soon lose thousands of jobs because of the Federal Reserve's attempts to curb inflation.
According to a recent report sent by BoA to its clients, job growth is expected to be sliced in half at the beginning of next year, despite current news that the job market is bewilderingly strong.
According to BoA’s findings, the Fed is raising interest rates faster than at any point in the last forty years. As a result, BoA predicts that about 175,000 jobs will disappear from the market during the first quarter of 2023. BoA expects this job loss to continue throughout the year.
Michael Gapen, Head of U.S. Economics at Bank of America, told CNN that he expects a recession to begin in the first part of next year. Though the Fed intended upon a soft landing, Gapen notes, experts are expecting a hard one. He adds that it’s unlikely that the Fed will be able to slow the jobs market incrementally to get inflation back to normal, which would have been the ideal option.
Gapen expects the unemployment rate to hit a high of anywhere between 5% and 5.5% as of next year, noting that the Fed is willing to sacrifice the labor market for the sake of inflation. Currently, unemployment is at 3.5%, its lowest level since 1969.
That being said, not all experts agree that the jobs market is doomed to fall. The Conference Board recently released a statement that its Employment Trend Index, which amasses job market indicators, has ticked up over the past month. They say this is a sign that employment will grow over the next few months even if job gains decelerate. If this scenario is classified as a recession, they add, it will only be mild.