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Bank of America warns US economy could lose 175,000 a month soon

The pace of job growth could be nearly cut in half by the fourth quarter of this year.
Economy
Posted at 6:49 PM, Oct 10, 2022
and last updated 2022-10-10 20:01:12-04

One of the largest banks in the U.S., Bank of America, is warning that the pace of job growth in the U.S. is expected to be cut by around half during the fourth quarter of this year.

Bank of America expects the U.S. economy to continue to lose jobs each month in the tens of thousands starting at the beginning of next year.

The Federal Reserve has been aggressively raising interest rates to slow demand in the real estate market, with purchases of cars and appliances and in many other areas.

“We are looking for a recession to begin in the first half of next year,” said Michael Gapen, head of US economics at Bank of America

“The premise is a harder landing rather than a softer one,” Gapen said.

The U.S. added 263,000 jobs in September, which was more substantial than economists expected, CNN Business reported.

The U.S. central bank has been raising interest rates at its fastest pace in four decades, and Gapen says the Fed is willing to accept some weakness in the labor market to bring down inflation.

The Federal Reserve is expected to keep interest rates high and "restrictive" for a substantial period. The exact amount of time is not certain.

The Conference Board gave a slightly different assessment on Monday, saying “employment will continue to grow over the coming months,” with the caveat that job growth could “decelerate from" the "recent pace.”

The expected recession will likely be a mild one, economists hope, and experts predict the unemployment rate will not jump to the levels that it was at in 2020 or 2008.