Bank of America CEO sees U.S. technical recession in 3rd qtr

FILE PHOTO: Chief executives of the country's largest banks testify at a Senate Banking, Housing, and Urban Affairs hearing on Capitol Hill in Washington

SYDNEY (Reuters) - Bank of America Chief Executive Officer Brian Moynihan said on Tuesday the U.S. economy would reach a technical recession starting in the third quarter.

Moynihan told The Financial Review's Business Summit in Sydney a U.S. recession would not be deep and the bank forecast interest rates would start falling in the second quarter of 2024.

The bank expects three quarters of negative U.S. growth led by a corporate slowdown, with the consumer sector in good shape, he said.

"Our base projection is for a recession to occur in the U.S. economy beginning in the third quarter of 2023, occur through the fourth quarter of 2023 and into the first quarter of 2024," Moynihan said.

The bank, he said, predicted the quarterly contractions would range between 0.5% and 1%.

"It's a very slight recession in the scheme of things. I don't think you'll see a deep recession," he said.

"In our view that is based on a corporate side or a commercial side slowdown, not a consumer side slowdown."

Moynihan said the bank forecast U.S. interest rates would start to be reduced in the second quarter of 2024.

"It's a very slight recession in the scheme of things. I don't think you're going to see a deep recession," Moynihan said.

"I think you're going to see a slowdown which frankly a lot of people are not going to see that much of. It will be more of a technical recession than it will be a deep drop in the U.S."

(Reporting by Praveen Menon and Lewis Jackson in Sydney; writing by Scott Murdoch; Editing by Chris Reese and Richard Chang)