American investment bank and financial service organisation Bank of America told its client on last Friday that United States of America will face huge crisis in labour market as more than 500000 jobs will be lost in the upcoming financial year.
Bank of America based in North Carolina is one of the largest banks in the country which serves more than 10% of the entire American population.
The report published by the bank to its clients states that unemployment will touch 5.5% in the labour market. Even though a large number of people will lose jobs, the impact of recession on Labour market would be minimal compared to previous recessions.
The projections of the Bank of America for employment growth suggests that the jobs will continue grow at average rate of 372,000 per month which has been in that level for the past three months.
In 2023, however, Bank of America expects the US economy to lose 175,000, 200,000 and 175,000 in the first three quarters of the year, before returning to job growth of 25,000 in the final quarter.
“The premise is a harder landing rather than a softer one,” Michael Gapen, head of US economics at Bank of America, told CNN.
Russian special military operation in Ukraine and sanctions on the Russian government and business entities had triggered oil price hike in the international. That led to high inflation in various economies all over the world.
As the Federal Reserve raises interest rates in an effort to bring down inflation, Fed Chair Jerome Powell has said the slowing of the economy that results will bring some “pain” for American workers. In September, the central bank projected that the US unemployment rate would rise from 3.8% to 4.4% for the following two years, translating to roughly 1.3 million job losses over the next 15 months. Bank of America’s projections, however, suggest that the pain for workers could be even worse — the bank projects the jobless rate to top out at 5.5% in the fourth quarter of next year.
That said, Gapen told CNN that even if these projections do come to pass, he would consider it to be a “mild” recession. The bank expects the labor market to steady after “six months of weakness” and not be as bad as the last two recessions. In March and April of 2020, the US lost 1,500 and 20,000 jobs, leading to an unemployment rate of nearly 15% — nearly three-times as high as what Bank of America is projecting this go-round.
