Bank of America sees inflation falling to this number by the end of next year—but it’ll take a recession to get there – By Will Daniel (Fortune) / Nov 29, 2022
Inflation has been a thorn in the side of the Federal Reserve and the Biden administration for more than a year, but Bank of America’s chief U.S. economist Michael Gapen says the worst of the price hikes are over.
Gapen argues that year-on-year inflation, as measured by the consumer price index (CPI), will sink to just 3.2% by the fourth quarter of next year. That’s quite the drop from June’s 9.1% peak, and October’s 7.7% figure.
“We expect core CPI inflation to moderate rapidly over the course of 2023 as supply-chain disruptions ease further, inventories recover, and labor market conditions weaken,” Gapen wrote in a recent research note.
But don’t get too excited. Gapen also believes that it will take a “mild” recession for inflation to fall, which means the unemployment rate will peak at 5.5% next year compared to 3.7% in October.
