Wells Fargo Bank expects the Fed to raise interest rates to levels between 5.00% and 5.25% by March 2023. In addition, the bank's analysts assume that CPI inflation will fall in the United States next year and will be around 3.8%. According to the bank, the Federal Reserve's restrictive monetary policy will have the visible and intended effect of lowering inflation at the expense of slowing US economic growth in 2023.
Wells Fargo GDP forecasts:
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- 0.2% U.S. GDP growth in 2023
- 0.7% decline in eurozone GDP in 2023
- 4.9% GDP growth in China, in 2023
Wells Fargo CEO Charlie Scharf indicated yesterday that there is a slowdown in the U.S. economy, about which there is no doubt. The bank expects a weakening economy throughout 2023. However, the CEO stressed that the downturn is not felt equally by retail customers and businesses.
Bank of America CEO Brian Moynihan concurred with Scharf's vision. In his view, after two years of growth fueled by demand-supply imbalances and monetary easing, the economy is "clearly slowing down." Although retail sales have risen 11% this year to nearly $4 trillion, this growth obscures the slowdown, which BofA said has accelerated in recent weeks, with November spending rising just 5%. Bank of America expects the first three quarters of negative economic growth in the U.S., with a slight increase only in the last quarter of 2023.
According to Wells Fargo and Bank of America, the slowdown will have an impact on lower corporate revenues. At the same time, the market consensus still assumes revenue growth for S&P500 companies in 2023, which could account for possible negative disappointment for investors if the recessionary revenue scenario materializes.
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