US economy in recession, little risk of hard landing: BofA

• The U.S. is in a recession that’s hitting sector by sector, Bank of America’s Keith Banks said.
• While services remained strong, banks pointed to weakness in manufacturing, energy and housing.
• In the first half of 2024, he predicted a mild recession with GDP falling by 1%-1.5%.

The recession heralded the death of Wall Street According to Bank of America Executive Keith Banks, the economy is hitting sector by sector rather than all at once — and that has reduced the risk of a sudden hard landing.

„We have a $26 trillion economy that is fundamentally made up of different sectors, operating at different speeds. So what we saw in the first half was a slowdown in manufacturing, energy and housing,” Banks said in an interview. CNBC on Friday, pointing to lingering economic weakness in those areas.

Housing activity is slowing As mortgage rates have risen over the past year. Energy prices have also fallen Since last summer’s maximum, and Production function Manufacturing PMI fell by 46% last month, falling for the eighth straight month in June. Traditionally associated with depression.

Meanwhile, other parts of the economy remain buoyant. The services sector was strong in the first half as US consumers continued to spend despite a gloomy economic backdrop. US GDP rose 2% in the first quarter.

Bank of America economists expect GDP to grow just 1.5% in the second quarter, slowing later in the year. Banks estimate a 1%-1.5% contraction in GDP in the first and second quarters of next year, with a milder recession likely to last through the first half of 2024 as the slowdown spreads to other parts of the economy.

„Instead of popping the balloon, it slowly deflates,” Banks said. „We think this kind of rolling recession has taken the big-bang risk of a hard landing that a lot of people were worried about earlier this year,” he said later.

Other commentators are more optimistic about the economy as the job market remains strong and inflation cools. The The recession that was so widely predicted last year may not come until laterSome experts say the labor market is holding steady and inflation can be contained without crushing demand.