The Bank of America has warned that the Federal Reserve’s fight to squash inflation will cause the US economy to start losing tens of thousands of jobs a month beginning early next year.
The rate of job growth is expected to be approximately cut in half during the fourth quarter of this year, Bank of America told clients in a report Friday.
As pressure from the Fed’s war on inflation builds, nonfarm payrolls will begin shrinking early next year, translating to a loss of about 175,000 jobs a month during the first quarter, the bank of America said.
Charts published by Bank of America suggest job losses in the US will continue through much of 2023.
Last Friday’s jobs report showed that although the jobs market is slowing down, the United States added a stronger-than-expected 263,000 jobs in September.
The US central bank is raising interest rates at the fastest pace in at least four decades in a bid to cool inflation.
Fed officials have made clear they are in no rush to shift out of inflation-fighting mode to save the economy from a slowdown or even a recession.
The United unemployment rate dropped to 3.5%, tied for the lowest level since 1969, but the rate has slowly gone up and economic experts have predicted that it might peak at 5.5% soon.
Some forecasters are more bullish on the state of the jobs market. The Conference Board said Monday its employment trend index, a combination of leading job market indicators, ticked up last month.
The Conference Board said this is a signal that “employment will continue to grow over the coming months,” though job gains are likely to “decelerate from their recent pace.”