Bank of America chief economist Michael Gapen said the risk of the US economy falling into a recession is high and that 2023 could be a difficult year for the country.
Gapen made the remarks in an interview with CBS News aired on Sunday where he agreed with a The Wall Street Journal poll host Margaret Brennan quoted which said that the US economy is going to look and feel worse in 2023.
“I think we're in a situation where the risk of recession is high, may not be a deep and prolonged one. But we're in a situation where the economy has recovered very rapidly from- from COVID, and it's come with a lot of inflation. And the Federal Reserve is trying to slow down the economy, to bring inflation down,” he said.
Bank of America Chief Economist Michael Gapen on recession odds in 2023: “We may be able to avoid it...but I do think 2023 could be a difficult year for the U.S.” pic.twitter.com/weMCdaJfPT— Face The Nation (@FaceTheNation) January 1, 2023
“And in the past, more often than not, that's coincided with some sort of recession in the US economy and the US labor market. It's not baked in. It's not for certain. We may be able to avoid it, but I would agree that the outlook by most people who sit in the position that I do think 2023 could be a difficult year for the US,” he said.
Elsewhere in his remarks, Gapen said recession “doesn't have to be deep. It doesn't have to be prolonged. I think what we just need to do in some ways is take the edge off an economy that's emerged from the pandemic with a lot of strength and brought too much inflation with it.”
The widespread perception is that America’s central bank is forcing a recession to reduce inflation, even if that means throwing millions out of work, out of their homes and guts pensions, which are usually based on the stock-market.
The drop in jobs is the latest piece of data which shows a dangerously worsening economic situation for the average American. Wages are losing ground to inflation at a steep rate, and a difficult 2023 may mean a painful year for many Americans.
An Iranian-American economist has warned that the United States is at the cusp of a “long and severe” recession, which he says could bring financial distress "across the board."
Nouriel Roubini, who accurately predicted the housing bubble burst in 2008, was quoted as saying by Bloomberg that the country is in a "sharp slowdown".
Roubini said, "The recession is going to be long, protracted, severe, and associated with financial distress across the board."
Meanwhile, former US treasury secretary Steve Mnuchin said in October he believed the United States was in a recession and said this would continue.