▶ Watch Video: Bank of America CEO Brian Moynihan sees mild recession in 2023

The following is a transcript of an interview with Bank of America CEO Brian Moynihan that aired Sunday, Dec. 4, 2022, on “Face the Nation.”

MARGARET BRENNAN: We turn now to the economy and the mixed signals about its future. Brian Moynihan is the CEO and Chairman of the Board of Bank of America. And it’s good to see you back here in person.

BRIAN MOYNIHAN: It’s good to be back here. It’s been a couple of years. Last time was right when the pandemic started.

MARGARET BRENNAN: I know and I remember what a chilling moment that was, and yet, we are still living through the implications of that pandemic. Your firm is predicting recession in 2023, but a brief and a mild one. I wonder when it hits and what a mild recession feels like for the average American?

MOYNIHAN: Well, just to sort of be concrete on numbers, they basically picked negative growth around 1% or so for the next- for the first three quarters of ’23, and then it comes back to positive growth. That means a year is negative overall, but- but it’s just 1%. So, you think about the recession, we were sitting here, we went down 30%, that– 


MOYNIHAN: –next quarter and stuff. So, this is a more mild recession, largely because the underlying activity is still strong, and that’s the tension in the Fed trying to cool down inflation, while at the same time not drive the economy in a deep recession. 

MARGARET BRENNAN: But when people hear recession, it- it affects their planning for the future. It affects their feeling of- of security and the jobs they have. I mean, just this past week, we saw a string of job cuts being announced at tech companies, at media companies. Is this the beginning of a wave?

MOYNIHAN: This is- this is what happens. When you- when you raise interest rates, you know the Fed is trying to slow down economic activity, and where does it slow down first? The most rate-sensitive: houses, housing’s tipped over, you know, cars, prices go up, although sales have stayed strong and new cars because they weren’t there, and they just have become available. But used car prices have tipped back down. So they’re- the most rate-sensitive are affected by it. 

What takes longer to happen is the final demand for entertainment for hotels for travel is still very strong. And so if you look at spending in our customers, for the month of November, it was about 5% over last year, if you go back and think early in the year was running 10%, 12%. So what’s happening is consumers are slowing down their spending. They still have money in their accounts. It’s starting to come down a little bit. They still have borrowing capacity, but they’ve started to use it. So, all that means that the Fed rate hikes are slowing down the economy. The question is when will inflation tip down? And then they can back off. And that’s the tension we’ve- so we’ve gone from was temporary temp was inflation temporary, which is last year’s discussion to it’s real. Now the question is how long would they have told rates here? How long would have to hold rates at this level to keep the economy going to get inflation down without hopefully hurting the economy, and that’s the debate we’re going through right now. But you’re seeing the signs, in terms of job openings declining a little bit, you’re seeing the signs of turnover slowing down at companies. And while those may not be good signs for the individual involved, it’s actually good science, the economy in terms of it starting to get into a better situation that it can grow at a more normalized rate.

MARGARET BRENNAN: You- You’re fairly characterizing all the different pieces here, but you do sound more optimistic than many of your peers, even those who are predicting a recession like J.P. Morgan. They famously, their strategist said a category one economic hurricane is on the horizon. What would move you from mild to gale force winds? I mean, how do we- what changes things along the way? 

MOYNIHAN: Well, the belief was when the Fed started raising rates that there’d be an immediate snap to the economy. The thing that didn’t happen, those predictions were from, you know, the spring of this year in 22. What didn’t happen because consumers remain strong, and the amount of stimulus going into the economy is so high. It didn’t happen the way people thought. Unemployment is still 3.7. 


MOYNIHAN: They just had 200,000 jobs. So, how can you have an unemployment-less recession? That’s almost hard to posture, right? So, all the math and science that people looked at for years just kind of gotten thrown straight because a massive stimulus went in. So, if you looked where all of the guests you had on this morning, talked about parades of horrible stuff, Russia-Ukraine situation, what’s going on China, those things all would change the basic outlook, but if they just stay right now, it’s kind of play, they stay sort of status quo, and it doesn’t solve but doesn’t get worse. 


MOYNIHAN: Oil prices stay around $100 a barrel, more or less, they were there for five years between 2010 and 2015. So, none of that kills the economy on its own, but all those things going in a very wrong direction, you’d see a massive change in the economic activity. And that’s what- that’s what people are try- trying to hamstring. In the base projection, most people have, the Wall Street firms and stuff, it’s all pretty similar. A shallow recession, with recovery later. Rates stay a lot- lot higher than people think for longer period of time, you know, all the way into the end of ’24 because inflation is harder to choke off because there’s such underlying cash in the system. 


MOYNIHAN: And that- that’s what nobody’s ever dealt with. Now, where does that cash come from? The government gave–


MOYNIHAN: –out a lot of stimulus. The problem is the government is running high deficits. And that’s why when you talk earlier about debt ceilings, those are important things to not have create problems in the economy. And I think–

MARGARET BRENNAN: That’s one of your worries for- for 2023?

MOYNIHAN: All business people don’t like surprises, and we’d like to make sure that we got through a normal budget process and a normal, you know, debt ceiling process. 

MARGARET BRENNAN: But you’re not confident about that?



MOYNIHAN: I’ve been CEO for 13 years now and I’ve had some interesting times on this, but generally it works out and– 


MOYNIHAN: I have confidence that people come to a table. There’d be a lot of discussion you talked about with some of your guests, but ultimately it has to get there because ultimately we have to run this great country because it’s got 300 million people that the world depends on.

MARGARET BRENNAN: So, the economy and the market, not the same thing. But the political, you know, the adage was that political gridlock is good for the markets. That’s the way it used to be. I wonder if the environment is different now. Your strategists also said they’re bearish. They worry unemployment in 2023 will be as shocking to mainstream consumer sentiment as inflation was in 2022. So, how do you recommend to clients they protect themselves if we’re going to see the markets possibly take a downturn?

MOYNIHAN: Well, that’s so unemployment, our team would predict it gets back up to 5%. That’s a percent and a half from where we are now, that is 150 odd million workers. So that is, but that’s where it was two years before – ’17, ’18. So ’17 ’16. So it- we didn’t feel horrible then. The question is it’s just a change will people lose their jobs? And that’s a horrible thing to contemplate. And that’s what they’re worried about the compounding effect of the worry about having a job versus actually losing your job changes consumer behavior, and you’re seeing that go on a little bit right now. And that’s the Fed has to create that sort of nervousness to help tip the inflation back down. Wage growth is strong, which is a good thing. But also strong means they have to–


MOYNIHAN: –slow it down to match the otherwise we’re going to have a wage inflation spiral. So all that- all that comes together. So as you think about it, think about next year is really important to see the mitigating impact of these things. The employment markets gets less tight, is already less tight, continues to get less tight. Therefore wage growth slows down, therefore inflation will slow down. If that doesn’t happen, then the Feds going to have to go a lot higher. There’s economists think they should. But if they get it there, they can hold it there and let the system catch up too.

MARGARET BRENNAN: Why are savings yields so much lower than where the inflation rate is? Why aren’t people making more money in their savings?

MOYNIHAN:  There’s a lag effect to the change in rates and prices in everything. And so what they’ll do is they keep coming up, and each month you’ll see them come up as people pay higher rates to retain the funds. The big difference between, you know, the last time we went to a rate-tightening cycle and now, is the amount of cash in the system is so high that companies have a lot of- banks have a lot of liquidity. They’re well capitalized, they’re very strong. And that’s even going back to our discussion March 20. The difference is the banks were very strong, they helped the clients through it, they didn’t cause any problems. They’re very strong. So what’s going to happen there’s going to be more conservative, recover the 15 years a low rate environment where they underearn–


MOYNIHAN: They’re recovering, but ultimately, they’ll come to- come to reach more equilibrium.

MARGARET BRENNAN: Brian Moynihan, thank you for your time today. We’ll have more on the economy and the forecast for 2023 next week with Jamie Dimon, the Chairman and CEO of J.P. Morgan Chase. We’ll be back in a moment.