The latest jobs report shows that the U.S. labor market is in decent shape, but Bank of America sees trouble looming in the distance.
In September, total nonfarm payroll employment rose by 263,000, beating economists’ expectation of a 250,000 increase. It also means that America’s job growth is heading in the right direction.
Bank of America, however, expects nonfarm payroll gains to be cut in half in Q4 of 2022 and turn negative in 2023. During the first quarter of 2023, the bank projects that the U.S. will be losing roughly 175,000 jobs a month.
And it’s not just the labor market that’s going to take a hit.
“We are looking for a recession to begin in the first half of next year,” Bank of America’s head of U.S. economics Michael Gapen tells CNN.
“The premise is a harder landing rather than a softer one.”
Let’s take a look behind the bearishness.
ຢ່າພາດ
Inflation, unemployment, and the Fed
The U.S. Federal Reserve has a dual mandate: to ensure price stability and aim for maximum employment.
The first task has been a challenge: prices have been anything but stable. In June, U.S. consumer price index saw its biggest 12-month increase in 40 years. While the headline CPI number has cooled off from its peak recently — September’s inflation rate was 8.2% year-over-year — it’s still worryingly high.
The labor market — the Fed’s second task — seems to be in much better shape. In September, the unemployment rate fell to 3.5%, a multidecade low.
Given this labor market strength and rampant inflation, the Fed is raising interest rates aggressively to ເອົາລະດັບລາຄາພາຍໃຕ້ການຄວບຄຸມ. The central bank increased its benchmark interest rates by 75 basis points last month, marking the third such hike in a row.
Gapen expects the Fed to remain hawkish.
“They’ll accept some weakness in labor markets in order to bring inflation down,” he says, adding that “we could see six months of weakness in the labor market.”
According to the Fed’s latest projection, Federal Open Market Committee participants have a median forecast of 4.4% for the unemployment rate in 2023.
Gapen, on the other hand, sees the unemployment rate in the country rise to 5% or 5.5% next year.
More downside for stocks?
The prospect of negative job growth and a recession probably won’t bode well for the stock market. When the economy contracts, corporate profits usually deteriorate.
In fact, stocks have already been pummeled — the S&P 500 has plunged 25% year to date.
Bank of America’s head of U.S. equity and quantitative strategy Savita Subramanian recently said that the benchmark index is “expensive” and “super crowded.”
ນາງບອກ CNBC ວ່າ "ສິ່ງທີ່ຮ້າຍແຮງທີ່ສຸດທີ່ຈະຖືແມ່ນ S&P 500 wholesale," ນາງບອກ CNBC.
Subramanian suggests that if you have a 10-year investment horizon, you can “hold the S&P 500 and watch and wait.”
“But if you’re thinking about what’s going to happen between now and let’s say the next 12 months, I don’t think the bottom is in.”
ແມ່ນຫຍັງ should investors do?
Subramanian sees opportunities in small-cap stocks, energy, and healthcare. She also likes “select industrials” — particularly automation plays.
ສິ່ງທີ່ຈະອ່ານຕໍ່ໄປ
'ລົດບັນທຸກຄັນນີ້ບໍ່ສາມາດເຮັດສິ່ງຂອງລົດບັນທຸກແບບທຳມະດາໄດ້': ດາວ YouTube ກ່າວວ່າການຂີ່ລົດກະບະໄຟຟ້າໃໝ່ຂອງ Ford ແມ່ນ "ໄພພິບັດທັງໝົດ" ໃນວິດີໂອໄວຣັສ - ແຕ່ Wall Street ຍັງມັກ 3 ຮຸ້ນ EV ນີ້
'ການປີ້ນຄືນທີ່ໂດດເດັ່ນ': ປະທານາທິບໍດີ Biden ພຽງແຕ່ (ງຽບໆ) ໄດ້ຂະຫຍາຍການໃຫ້ອະໄພເງິນກູ້ຂອງນັກຮຽນ - ແລະການປ່ຽນແປງສາມາດສົ່ງຜົນກະທົບຕໍ່ຜູ້ກູ້ຢືມເຖິງ 1.5 ລ້ານຄົນ. ເຈົ້າແມ່ນ ໜຶ່ງ ໃນນັ້ນບໍ?
ພັກເດໂມແຄຣັດ ໄດ້ຮ່າງຮ່າງກົດໝາຍວ່າດ້ວຍການຫ້າມນັກການເມືອງ, ຜູ້ພິພາກສາ, ຄູ່ສົມລົດ ແລະລູກໆຂອງເຂົາເຈົ້າ ບໍ່ໃຫ້ຊື້ຂາຍຮຸ້ນ - ແຕ່ນີ້ຄືສິ່ງທີ່ພວກເຂົາຍັງຄົງຢູ່. ອະນຸຍາດໃຫ້ເປັນເຈົ້າຂອງແລະເຮັດ
ບົດຄວາມນີ້ໃຫ້ຂໍ້ມູນເທົ່ານັ້ນແລະບໍ່ຄວນຕີຄວາມasາຍເປັນ ຄຳ ແນະ ນຳ. ມັນຖືກສະ ໜອງ ໃຫ້ໂດຍບໍ່ມີການຮັບປະກັນໃດ kind.
Source: https://finance.yahoo.com/news/bofa-warns-us-economy-start-170000414.html