Bank of America no longer forecasts a U.S. recession in 2024

A highly-dreaded U.S. recession is no longer in the works, according to Bank of America CEO Brian Moynihan. 

The nation’s second-largest bank is not predicting an economic downturn “anymore,” Moynihan told CBS‘ Margaret Brennan on “Face the Nation” Sunday. “Last year, this time, it was a recession,” he stated. “This year we talked about now there’s no recession.”

BofA’s latest prediction suggests the Federal Reserve’s efforts at taming inflation while keeping the U.S. economy afloat are working. 

Consumer spending has softened, Moynihan said, citing the lender’s vantage point of having a customer base of 60 million. People in July and August spent at a growth rate of about 3% this year — half the rate it was in 2023, BofA found. Consumers “have money in their accounts, but they’re depleting a little bit. They’re employed, they’re earning money, but if you look at — they’ve really slowed down,” he said.  

The positive scenario puts the Fed in the position of working to ensure that its policy moves do not slow the economy too much, the bank chief said. “We’ve won the war on inflation, it’s come down. It’s not where people want it yet, but we’ve got to be careful that we don’t try to get so perfect that we actually put us in recession,” he said, quickly adding that BofA does not believe that will occur.

But not all analysts agree with the lender’s optimistic view, with one recent report, in particular, prompting some economists to warn the country is not out of the woods yet: A disappointing jobs report earlier this month factored into a three-day stock-market rout and helped spark debate over whether the nation is looking at the start of a recession. 

BofA researchers say “we go to 2% growth, then 1.5% growth over the next six quarters and kind of bump along at that growth rate plus or minus,” according to Moynihan.

Further, the BofA team expects the Fed to cut rates twice this year, first in September and then again in December, with four additional reductions in 2025, he relayed. BofA holds the view of many in looking to an eventual Fed funds rate of 3% to 3.5%, which Moynihan noted differs from the last 15 years or so. 

“People who entered the business world in 2007, 2008 have not seen this kind of interest rate environment,” the bank executive said. “We’re getting back to normal, and that’s going to take a while for people to adjust to, both on the corporate side and commercial side and on the consumer side.”