Expect Layoffs And A Recession, Bank Of America Exec Warns

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If the U.S. Federal Reserve continues its policy of aggressive interest rate hikes, the U.S. could lose hundreds of thousands of jobs, spiking unemployment, according to a Bank of America analysis, CNN reported.

Bank of America’s Chief U.S. Economist Michael Gapen expects roughly six months of relatively high unemployment and a”mild recession,” as the Fed’s aggressive interest rate hikes blunt consumer demand, he told CNN Monday. However, Gapen also noted that the typical bounceback seen after a recession might be delayed if the Fed, which has been incredibly hawkish on interest rates, refuses to reduce rates. (RELATED: The Unemployment Rate Dropped In September — But The Reason Why Is Far From Encouraging)

The labor market showed signs of cooling in September, adding the fewest jobs of this calendar year as unemployment dipped to 3.5% from declining labor force participation. Gapen anticipates that the U.S. will lose approximately 175,000 jobs per month early next year, according to CNN.

The Fed has been open about the expectation that interest rate hikes will prompt economic “pain,” leading to a weaker labor market. The Fed currently expects unemployment to hold between 4.1% and 4.5%, with a median rate of 4.4% in 2023, even as inflation drops below 3.5%.

A Bank of America spokesperson did not immediately respond to the Daily Caller News Foundation’s request for comment.

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