Bank of America will distribute $1 billion worth of stock to nearly all of its employees through its Sharing Success Program, the Charlotte-based bank said Tuesday.
The awards will total nearly 19 million shares of the company’s common stock this year, according to Bank of America. The award is for non-executive employees, in addition to compensation and incentives.
That’s pretty good timing: Bank of America stock was at an all-time high of $57.25 on Jan. 6. On Tuesday, Jan. 20., the stock opened at $52.32.
Bank of America has about 213,000 employees with more than 19,000 in the Charlotte region. This is the ninth year in a row the bank has provided employee stock awards, totaling almost $6.8 billion, the bank said.
The bank declined to break out award levels.
The stock awards let employees share in Bank of America’s success and align their interests with shareholders, CEO and Chairman Brian Moynihan said in the bank’s statement. “We are proud to continue investing in our people and reinforcing a culture of shared growth and achievement,” he said.
Speaking on Fox Business Tuesday morning, Moynihan said the Trump administration’s “Big, Beautiful Bill” helped reassure businesses that corporate tax rates will remain stable, boosting confidence in making long-term investment decisions.
Bank of America has about 213,000 employees, including 19,000 in the Charlotte area. Shown, the bank’s corporate center in uptown Charlotte. The bank is giving its employees more shares of company stock when those shares recently hit an all-time high. Arthur H. Trickett-Wile atrickett-wile@charlotteobserver
Minimum wage increase: The bank raised its U.S. minimum hourly wage to $25 per hour, effective in early October. This increase brings the minimum annual salary for full-time employees to more than $50,000.
Trump accounts: The company has begun engaging with the Trump administration on implementing Trump Accounts for its employees and clients. The Working Families Tax Cuts allows parents and guardians to establish a new type of individual retirement account for their children, called Trump Accounts, according to the IRS.
Hiring initiatives: Bank of America is expanding its skills-based hiring program by recruiting 10,000 more military personnel, increasing community college recruitment and adding jobs at branches in fast-growing markets nationwide.
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This story was originally published January 20, 2026 at 12:17 PM.
Catherine Muccigrosso is the retail business reporter for The Charlotte Observer. An award-winning journalist, she has worked for multiple newspapers and McClatchy for more than a decade.
A major U.S. bank, with over $2.6 billion in assets, just raised its minimum wage.
Bank of America announced on Wednesday that it would raise its minimum pay for its full- and part-time U.S. hourly workers to $25 an hour. The change will take effect next month, pushing the minimum salary for full-time U.S. employees to over $50,000 annually.
This pay increase is the final phase of a plan announced in 2017 to boost the bank’s base pay from $15 an hour to $25 an hour by 2025. (Employees have been making $24 an hour since October 2024.) With the raise to $25 an hour, the starting salary for full-time U.S. workers will have increased by more than $20,000 since 2017.
“[The raise] gives a teammate a chance to join our company, spend their whole career here, and support their families,” Bank of America CEO Brian Moynihan told Bloomberg.
Moynihan emphasized that the higher minimum wage minimized turnover, causing the rate of departing employees to drop from 20% in 2017 to around 10% this year. Customer attrition, or a loss of customers, has also dropped, he stated.
Bank of America CEO Brian Moynihan. Photographer: Betty Laura Zapata/Bloomberg via Getty Images
As Bank of America adopts new technologies like AI, it has reduced its number of employees across some departments, Moynihan told Bloomberg. The goal is to put more dollars in the pockets of the employees who remain and “re-skilling them,” he said.
Bank of America had about 213,000 employees as of July, according to its newsroom.
Amazon also announced this week that it would increase its average hourly pay to more than $23 per hour. The retail giant is investing more than $1 billion to increase wages and decrease the cost of healthcare plans for its employees.
Full-time employees will have their pay increase by an average of $1,600 per year.
Meanwhile, Amazon’s entry-level healthcare plan will cost $5 per week and $5 for co-pays beginning next year. Amazon stated that the change is a 34% reduction in weekly contribution costs.
Amazon employed 1.55 million people globally as of the end of last year.
A major U.S. bank, with over $2.6 billion in assets, just raised its minimum wage.
Bank of America announced on Wednesday that it would raise its minimum pay for its full- and part-time U.S. hourly workers to $25 an hour. The change will take effect next month, pushing the minimum salary for full-time U.S. employees to over $50,000 annually.
This pay increase is the final phase of a plan announced in 2017 to boost the bank’s base pay from $15 an hour to $25 an hour by 2025. (Employees have been making $24 an hour since October 2024.) With the raise to $25 an hour, the starting salary for full-time U.S. workers will have increased by more than $20,000 since 2017.
Brian Moynihan, Bank of America chair and CEO, joins ‘Squawk on the Street’ to discuss how Moynihan characterizes the environment the bank is operating in, to what degree Bank of America gets hurt by lower rates, and much more.
Brian Moynihan, Bank of America chair and CEO, joins 'Squawk on the Street' to discuss how Moynihan characterizes the environment the bank is operating in, to what degree Bank of America gets hurt by lower rates, and much more.
(Bloomberg) — Warren Buffett’s Berkshire Hathaway Inc. disclosed its third disposal of Bank of America Corp. shares this month — paring its massive, profitable bet on the lender by a total of more than $3 billion.
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The conglomerate, which started building an investment in the bank in 2011 and has long reigned as the top shareholder, sold $767 million of the stock from July 25 to July 29, according to a regulatory filing Monday. That and prior sales this month reduced Berkshire’s stake by a total of 6.9%.
Still, Berkshire holds almost 962 million shares, the filing shows — worth $39.5 billion at Monday’s closing price.
The sales mark Buffett’s biggest pullback from a bet that has long served as a prominent vote of confidence in the stewardship of Bank of America Chief Executive Officer Brian Moynihan. The legendary 93-year-old investor is cashing out with the price up 22% this year.
Representatives for Berkshire and Bank of America didn’t respond to messages seeking comment outside normal business hours.
Buffett initially plowed $5 billion into Charlotte, North Carolina-based Bank of America at a dark time. The company was facing mounting legal liabilities after the 2008 financial crisis, and shareholders were growing anxious about the toll that was taking on its capital.
Buffett has said he was in the bathtub when he came up with the idea of intervening, arranging to acquire preferred stock and the right to buy common shares. His imprimatur quelled public doubts and soon sent the stock higher, creating a massive paper profit.
Berkshire kept investing in Bank of America in the decade that followed, eventually seeking regulatory approval to amass a stake surpassing 10%. Last year, as Buffett adjusted financial-industry bets and exited some, he called out Bank of America as one to keep.
“I like Brian Moynihan enormously,” he said that April. “I just don’t want to sell it.”
Bank of America Chairman and CEO Brian Thomas Moynihan speaks during the U.S. Senate Banking, Housing and Urban Affairs Committee oversight hearing on Wall Street firms, on Capitol Hill in Washington, U.S., December 6, 2023.
Evelyn Hockstein | Reuters
U.S. consumers and businesses alike have turned cautious about spending this year because of elevated inflation and interest rates, according to Bank of America CEO Brian Moynihan.
Whether it’s households or small- to medium-sized businesses, Bank of America clients are slowing down the rate of purchases made for everything from hard goods to software, Moynihan said Thursday at a financial conference held in New York.
Consumer spending via card payments, checks and ATM withdrawals has grown about 3.5% this year to roughly $4 trillion, Moynihan said. That’s a sharp slowdown from the nearly 10% growth rate seen in May 2023, he said.
“Both of our customer bases that have a lot to do with how the American economy runs are saying, ‘You know what? I’m being careful, slowing things down,’” Moynihan said, referring to consumers and businesses.
The slowdown began last summer and is consistent with the “very low growth” environment of the period from 2016 through 2018, he said.
Nearly a year after the last Federal Reserve rate increase, consumers and businesses are wrestling with inflation and borrowing costs that remain higher than they are accustomed to. The Fed began efforts to tame inflation by hiking its benchmark rate starting in March 2022, hoping it could slow the economy without tipping it into recession.
Many economists believe the Fed is on track to pull off that feat, which has helped the stock market reach new highs this year. But consumers are still grappling with higher prices for goods and services, and that has impacted U.S. companies from McDonald’s to discount retailers as Americans adjust their behavior.
Food shoppers are hitting up more store locations in search of deals, according to Moynihan. “They’re going to three grocery stores instead of two, is one of the stats we see,” he said.
The now-tepid growth in overall spending is being propped up by travel and entertainment, while “other things have moderated, except for insurance payments,” Moynihan said. Growth in rent payments has slowed, he noted.
“We’ve got to keep the consumer in the game in the U.S. economy, because [they’re] such a big part of it,” Moynihan said. “They’re getting a little more tenuous, and that is due to everything going on around them.”
The same is true for small- and medium-sized businesses, the Bank of America CEO said. His company is the second-largest U.S. bank by assets, after JPMorgan Chase. Moynihan and other bank CEOs have a bird’s-eye view of the economy, given their coast-to-coast coverage of households and companies.
Business owners are saying, “‘I still feel good about my overall business, but I’m not hiring as much. I’m not buying equipment as fast. I’m not making software purchases as fast,’” Moynihan said.
The bank’s economists believe that inflation will take until the end of next year to get under control and that the Fed will begin cutting interest rates later this year, Moynihan said. The U.S. economy will probably grow at around a 2% level, avoiding recession, he added.
While many on Wall Street are pining for a cut to the base rate from the Fed, Bank of America CEO Brian Moynihan seems relatively relaxed about when—or even if—that might happen.
The banking boss—whose work has been lauded by the likes of Warren Buffett—said his team’s hypothesis is that the Jerome Powell-led Fed will lower rates four times in 2024. That’s one higher than initial indications provided by the Fed’s dot plot (a chart updated quarterly projecting the interest rate’s short-term moves) but two lower than the Wall Street consensus of six cuts.
And while many on the street might be banking on this scenario, Moynihan isn’t hanging his hat on it. In fact, it would actually be good news for his institution if the Fed didn’t cut rates as early as predicted.
If the Fed doesn’t cut rates soon “from our company’s perspective, that actually helps a little bit,” Moynihan told CNBC Friday. He explained this is “because [of] the vast amount of short floating rate instruments we have on the asset side and the cash, the $500 billion—almost $600 billion of cash—we put with the Fed overnight in very short Treasuries.”
Moreover, Moynihan laid out that a delay to cuts could benefit the consumer. Concerns about inflationary pressures are still chiming: geopolitical tensions such as the Russian invasion of Ukraine and the Israel-Hamas war are pushing up oil prices, with shipping reroutes around the Red Sea further adding to wider inflationary pressures.
In addition, the CPI (consumer price index) figures released last week for December were slightly more stubborn than hoped for. Seasonally adjusted, prices on the index rose 0.3% in December following 0.1% in November. Overall that brought the benchmark to 3.4% over the past 12 months, still well ahead of the Fed’s 2% target.
But despite these figures Moynihan notes that when the consumer began to show real signs of distress—or the “point of pain” as Bank of America has previously put it—the Fed listened. Moynihan said that when the market “moved heavily” and there was a sense the Fed should stop hiking, they did.
Combining inflationary fears with this flexibility from the Fed could work well, Moynihan said: “If you mix that all together, in the end of day, rates not coming down actually help us.”
Back to reality
On top of that, the longer-term work of the Fed wasn’t to merely get inflation under control but was also to reintroduce consumers to a normal level of rates, Moynihan said.
Consumers have enjoyed a period of exceedingly low rates since the 2008 financial crisis—the base rate only crept above 2% for a short period of time in 2019 before being axed again to stimulate the economy during the pandemic. From 1971 to 2023 the average base rate is 5.4%, according to Trading Economics, meaning the current base rate of 5.25 to 5.5% is actually fairly average.
“The reality is that everything’s setting up for them [the Fed] to be able to normalize the rate environment,” Moynihan explained. “Given that you’re seeing consumer spending, which, for the first part of ’22 to ‘23, was up double digits, it’s now down to 4 or 5% growth in the first part of ’24.”
He added: “That is more consistent with a lower-growth, low-inflation economy. If you think about the customer… if they’re slowing down their purchases, that’s not inflationary.”
If the balance tips too far, Moynihan said, the Fed will be forced into action: “The consensus view [is] basically planning for a soft landing, which is still a major step down in growth from the third quarter of ’23 to the first quarter of ’24. You’re going to see growth from 4%-plus to about 1%.
“That’s a major downdraft in growth and so the Fed at some point has to be careful it doesn’t go below that.”
Not everyone is so convinced by the soft landing prediction. JPMorgan CEO Jamie Dimon admits he is among the more cautious on Wall Street, telling Fox Business last week: “The government has a huge deficit, which will affect the markets. I’m a little skeptical on this Goldilocks scenario. I still think the chances of it not being a soft landing are higher than other people.”
‘Goldilocks’ growth refers to a period where data is not too hot to prompt the Fed to tighten rates but not cool enough to be an indication of struggling corporate profits.
Dimon said a harder recession may be on the cards, but added the U.S. economy could withstand that: “All of us in business have to learn to deal with the ups and downs of the economy. But I do think the crosscurrents are pretty high: the money running out, rates are high, QT [quantitative tightening] hasn’t happened yet.”
For Moynihan at least, the outlook is rosier. He concluded: “These external factors could hasten [the Fed] to do more faster cuts or cause them to hold on a little bit longer to make sure the inflation doesn’t kick back in.”
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The new CEO of failed Silicon Valley Bank is a familiar name to many in Charlotte’s banking community — Tim Mayopoulos was fired as general counsel of Bank of America in 2008 in the midst of the financial crisis and escorted out of the office by an HR representative.
Silicon Valley Bank failed after numerous companies transferred their cash from the bank when it couldn’t raise more capital after a $1.8 billion loss, TheStreet reported Saturday. The huge loss stemmed from a bond investment that was sold since depositors wanted to recoup their cash deposits, according to the financial news site.
In a message on LinkedIn and the new bank’s website clients Monday, Mayopoulos never mentions his ties to Bank of America. He referred to the job he landed next, noting that he was part of the new leadership at mortgage financing company Fannie Mae after the 2008-09 financial crisis.
Mayopoulos was CEO of Fannie Mae from 2012 to 2018, he said. He commuted from Charlotte to Fannie Mae headquarters in Washington, D.C., The Charlotte Observer reported in 2014.
“I am very proud of work we did there to restore the company to profitability and to stabilize the housing finance system in a period of unprecedented challenge,” Mayopoulos wrote in his message.
Fired by Bank of America
In testimony on Capitol Hill in 2009, Mayopoulos said he was stunned when Bank of America fired him in December 2008 and told him to leave immediately, The Charlotte Observer reported at the time.
He was the bank’s top lawyer during its negotiation to buy Merrill Lynch for $50 billion at the height of the financial crisis in September 2008. Mayopoulos gave prepared remarks to a House committee examining the bank’s purchase of Merrill Lynch and the accompanying $20 billion federal loan.
His termination came in December 2008, nine days after he advised the bank that it didn’t have the grounds to back out of its bid for Merrill Lynch despite that company’s mounting losses, the Observer reported.
Mayopoulos testified that he was in a meeting on Dec. 10, 2008, planning how to merge the legal departments of Bank of America and Merrill, when his assistant interrupted him.
An HR representative was waiting outside his office. The rep immediately took his company ID card, company credit card, Blackberry and office keys, and told him he couldn’t take anything with him, Mayopoulos told the committee.
The HR rep escorted him out to the executive parking garage, and Mayopoulos said he drove home.
The Moynihan connection
It wasn’t clear at the time if the advice about Merrill got Mayopoulos fired or if it was an executive drama involving Brian Moynihan, the current CEO of Bank of America, the Observer previously reported.
In fact, Moynihan came close to leaving the bank in late 2008 and Bank of America even prepared a news release announcing the departure, according to 2010 court filings, the Observer reported at the time.
Bank of America CEO Brian Moynihan was offered the bank’s general counsel role in 2008, a day before general counsel Tim Mayopoulos was fired from the post, The Charlotte Observer previously reported. Diedra Laird FILE PHOTO
Moynihan, who became CEO in January 2010, likely wouldn’t have gotten the job if he’d left the bank in December 2008, according to the Observer archives. He was head of the investment bank at the time, but would have lost the job to Merrill Lynch CEO John Thain after Bank of America closed on its purchase of Merrill, the Observer reported.
According to the 2010 court filings, the bank even prepared a draft news release announcing Moynihan’s departure. But after several board members objected, CEO Ken Lewis and another bank executive offered Moynihan the general counsel job. The bank fired Mayopoulos the next day, the Observer reported.
Romantic relationship headlines
In 2016, Mayopoulos made headlines of a different sort.
Fifth Third Bancorp fired its general counsel, a former lawyer for Bank of America, because of her romantic relationship with Mayopoulos, The Wall Street Journal reported at the time.
Mayopoulos, who was 57 and separated from his wife, disclosed the relationship to Fannie Mae’s compliance and ethics office in March 2016, according to The Wall Street Journal.
In a statement to the Observer at the time, Fannie Mae said Mayopoulos disclosed the relationship to the company’s office of compliance and ethics, and that its CEO followed the office’s guidance.
Mayopoulos “has no involvement in Fannie Mae’s relationship with Fifth Third Bank,” according to the statement.
More about Mayopoulos
Until recently, Mayopoulos was president of a Silicon Valley-based software firm that provides technology to financial institutions to serve consumer banking customers. He led digital mortgage platform Blend, Reuters reported in 2021.
“I know how important Silicon Valley Bank has been and continues to be to the success of its clients and the innovation ecosystem,” he wrote on the bank’s website.
Mayopoulos said the bank was “doing everything we can to rebuild, win back your confidence, and continue supporting the innovation economy. We recognize the past few days have been an extremely challenging time, and we are grateful for your patience.”
Business editor Adam Bell contributed to this report
This story was originally published March 15, 2023, 4:53 PM.
Related stories from Charlotte Observer
Joe Marusak has been a reporter for The Charlotte Observer since 1989 covering the people, municipalities and major news events of the region, and was a news bureau editor for the paper. He currently reports on breaking news.
Bank of America CEO Brian Moynihan said Tuesday that the economy hasn’t showed many signs of faltering in 2023, despite recession predictions.
Diedra Laird
dlaird@charlotteobserver.com
The recession that economists and investors feared in 2022 hasn’t happened yet, Bank of America CEO Brian Moynihan said Tuesday.
During livestreamed remarks at the Bank of America Securities Financial Services Conference in New York City, the chief executive of the Charlotte-based bank said that so far, he isn’t seeing any signs of a downturn.
Consumers are still spending, wealthy bank clients are still investing their cash and businesses have yet to see profits drop off, Moynihan said.
“They’re trying to be careful,” he said of the bank’s commercial customers. “But most of them, honestly, when you ask them are saying ‘I thought I’d be in worse condition right now. I thought I’d be facing more pressures, and things are still fine.’”
Moynihan’s comments echoed previous public remarks. He’s emphasized that, despite macroeconomic concerns about inflation and rising interest rates, consumers are still pumping money through the economy.
“Consumers have money, they’re employed, they’re spending and they have a lot of capacity to borrow,” he said. “That is what makes whatever we’re going through different.”
Last spring, economists warned of an oncoming recession as prices rose and the Federal Reserve increased rates in response.
But so far, the economy has avoided the crash landing that many feared: unemployment is at historic lows, and Americans aren’t holding on to their cash like they usually do in times of economic uncertainty.
This month, the U.S. unemployment rate fell to 3.4%, its lowest in more than half a century. And on Tuesday morning, the Labor Department reported that the pace of inflation continued its decline, falling to 6.4%.
Moynihan noted that, though the economy seems healthy now, a downturn could still be ahead, and firms are wise to prepare for that outcome.
“They’re sitting and saying ‘I know it’s gotta come. The Fed can’t tighten this aggressively and not cause (a slowdown),” he said. “I understand that.”
How Bank of America avoids job cuts
Moynihan also touched on the bank’s headcount.
During the 13 years that he’s led the bank, Bank of America’s total number of employees has varied greatly, ebbing and flowing between 200,000 and 300,000 workers.
The bank currently employs about 218,000 workers, Moynihan said.
Though other major banks, such as Goldman Sachs and Morgan Stanley, have announced major layoffs as the banking sector slowed last year, Moynihan has previously said that he’ll avoid deep job cuts.
Instead, he said, Bank of America will let headcount shrink naturally through leaving some roles unfilled when workers voluntarily leave the bank.
Bank of America was still hiring through the end of last year, adding 3,000 employees in the fourth quarter, Moynihan said.
The bank’s employment in Charlotte has grown as well.
In 2021, Bank of America had about 16,000 employees in the region. That number has increased to 18,000, the bank confirmed to The Charlotte Observer this month.
This story was originally published February 14, 2023, 1:39 PM.
Related stories from Charlotte Observer
Hannah Lang covers banking, finance and economic equity for The Charlotte Observer. Her work has appeared in The Wall Street Journal, the Triangle Business Journal and the Greensboro News & Record. She studied business journalism at the University of North Carolina at Chapel Hill and grew up in the same town as her alma mater.
Bank of America CEO Brian Moynihan had his total compensation for last year fall by $2 million, according to a securities filing from the bank.
Diedra Laird
dlaird@charlotteobserver.com
Bank of America CEO Brian Moynihan’s total compensation decreased by 6% for 2022, according to a recent securities filing from the Charlotte-based bank.
The bank’s board approved $30 million in total compensation for Moynihan last year, compared to $32 million in 2021. The filing didn’t provide a specific reason for the decrease.
In 2021, Moynihan’s compensation increased by 31% as Bank of America reaped record profits and the stock price soared. But a worsening economic outlook helped drag the bank’s stock back down last year — share prices fell 26% in 2022.
That decrease “reflect(ed) weakened investor sentiment given geopolitical tensions and recessionary fears,” the filing said.
On Monday morning, Bank of America’s stock was trading at $36.05.
Despite the pay dip, the board said in the filing that it acknowledged both the bank’s “continued success” last year and Moynihan’s leadership, particularly in a period of economic uncertainty.
Moynihan’s pay package for 2022 includes a $1.5 million base salary and $28.5 million in stock awards. Similar to prior years, he didn’t receive a cash bonus, the filing said.
Moynihan’s compensation over the years
Moynihan’s compensation, as authorized by the Bank of America board, has doubled since he took over as CEO in 2010. As some stock bonuses depend on meeting performance goals over multiple years, Moynihan’s actual take-home may differ from what the board awarded him.
Bank of America’s stock price has increased significantly during Moynihan’s tenure. On Dec. 31, 2009, it was trading at $15.06 a share.
The bank is one of Charlotte’s largest employers, with more than 18,000 workers in the region. It’s also the second-largest bank in the country, with $2.41 trillion in assets.
This story was originally published February 6, 2023 1:04 PM.
Related stories from Charlotte Observer
Hannah Lang covers banking, finance and economic equity for The Charlotte Observer. Her work has appeared in The Wall Street Journal, the Triangle Business Journal and the Greensboro News & Record. She studied business journalism at the University of North Carolina at Chapel Hill and grew up in the same town as her alma mater.
It might be a “mild” one, as Moynihan predicts, but from the world of global trade, there are several indicators backing up the bank chiefs’ view of the macroeconomic landscape, flashing warning signals of continued consumer weakness for the first quarter.
The flow of trade is a real-time and forward-looking indicator of consumer spending and the economy because it shows supply, demand, and consumption. Here are four indicators to watch and what they are currently showing.
Indicator No. 1: Warehouse inventory and rates
Warehouse inventory is a good indicator of the health of the consumer because it gauges how much product is sitting in storage. The more product sitting in storage, the more it takes up valuable space and increases the price of storage. According to WarehouseQuote’s Warehouse Pricing Index report for Q1 2023, warehouse rates remain at high levels as a result of warehouse inventories not coming down significantly in November and December.
This is significant because holiday items were brought in early in 2022 to avoid any delays as shippers saw in 2021. Holiday products were shipped from China to the U.S. between March and May of 2022, leading to increased storage in a warehouse, and that resulted in some massive inventory pileups during the summer from the biggest retailers including Walmart and Target. During the holiday season, it took hefty markdowns from retailers to move products. Where products were being moved more successfully was through internet-based sales.
“Based on the inventory, we see more consumers purchased online rather than in-store,” said Jordan Brunk, chief marketing officer of WarehouseQuote.com. “We had more e-commerce inventory from the warehouse than inventory heading to the brick-and-mortar stores.”
Overall, it expects the lack of warehouse capacity, combined with the lack of new square footage coming online due to the rising cost of capital and slower economy, to keep prices elevated even in a weaker consumer environment.
In Maersk‘s TransPacific Report at the end of December, it said weak demand was “expected to continue into 2023 due to a combination of high inventory levels and the likelihood of a global recession that could already be underway.”
Indicator No. 2: Manufacturing orders
The first indicator is manufacturing orders. Orders continue to be down, based on CNBC reporting, with the high inventories and a lack of consumer demand.
“We are still seeing a 40% drop in current manufacturing orders,” said Alan Baer, CEO of OL USA. “The first quarter is going to be challenging.”
The decrease in orders is based on what the factories normally receive from companies.
Indicator No. 3: Ocean freight bookings
As a result of the decrease in factory orders, there is less demand to book freight on a vessel. The SONAR Freightwaves chart below shows the steady decrease in global ocean orders.
The health of the U.S. consumer and the state of inventories for U.S. companies can be tracked by the amount of global product being brought in by ocean carriers. Ninety percent of all U.S. trade is moved on the ocean. The following chart from SONAR FreightWaves shows the diminished volumes on a global basis.
Indicator No. 4: Blank (cancelled) sailings
Blank sailings are a tool used by ocean carriers as a way to artificially constrict available vessel capacity which influences ocean freight rates. As a result of the drop in manufacturing orders and ocean orders, there are too many ships. Because of the lack of demand for the movement of ocean freight, due to the reduced manufacturing orders, ocean rates have precipitously dropped in all trade routes.
According to Xeneta and Sea-Intelligence, ocean carriers canceled more than six times the number of sailings on Asia to the U.S. West Coast trade route ahead of the Chinese New Year than they did during the same time frame in 2019.
“In a normal year, we tend to see very few blanked sailings in the run-up to this major Chinese holiday as shippers stock up on their inventories,” said Peter Sand, chief analyst at Xeneta. “So, this is a worrying development for carriers and, no doubt, a bad omen of what’s to come for the year ahead.”
Canceled sailings on the other leading trade routes also are elevated. The Far East to the U.S. East Coast skyrocketed by 340% over the same time period. Asia to North Europe has had a 715% increase in blanked sailings.
“This really demonstrates the low level of demand gripping the industry,” Sand said.
Bank of America CEO Brian Moynihan is sticking to his earlier predictions that a U.S. recession, if it comes, won’t be as bad as people fear.
“How could you have an unemployment-less recession?” Moynihan asked on CBS News’s Face the Nationprogram on Sunday, citing the 263,000 new jobs reported in the U.S. jobs report on Friday.
The Bank of America CEO on Sunday said he expects the U.S. economy to contract by “just 1%” for the first three quarters of 2023, then return to positive growth. “This is a more mild recession,” Moynihan said.
Moynihan has been more optimistic about the U.S. economy than some of his peers. Last week, the Bank of America CEO predicted a mild downturn on CNN, quipping “hurricane season is now closed.” (Moynihan was referring to a June comment from JPMorgan CEO Jamie Dimon that the U.S. economy was facing a “hurricane”)
In June, Bank of America’s incoming head of U.S. economics forecast that the U.S. might see a mild recession by the end of 2022. But strong consumer spending in September led Bank of America’s research team to move their recession forecast to 2023. “They keep pushing it out,” Moynihan joked last month at the Fortune CEO Initiative conference.
Moynihan’s more upbeat take on the U.S.’s economic future contrasts sharply to other dire forecasts.
In October, Nouriel Roubini, the New York University professor often dubbed “Dr. Doom” for his predictions about the 2007 housing crash, said he expects the U.S. to face a “long and ugly” recession.
Last week, Mohamed El-Erian, chief economic advisor for Allianz, called out banks predicting a “short and shallow” recession in an op-ed for the Financial Times. El-Erian says he worries that they risk “a repeat of the analytical and behavioral traps that featured in last year’s ill-fated inflation call.”
A June survey from the Financial Times reported that two-thirds of U.S. economists believed a recession would hit next year. CEOs are also worried, with 98% of corporate leaders preparing for a recession over the next 12-18 months, according to an October survey from the Conference Board.
Yet on Sunday, Moynihan defended his more optimistic view by pointing to the U.S.’s strong performance amid Federal Reserve interest rate hikes.
“The belief was when the Fed started raising rates that there would be an immediate snap to the economy,” Moynihan said. “That didn’t happen.”
Other banks are also reconsidering the possibility of a U.S. recession, thanks to better-than-expected economic data. Both Goldman Sachs and Morgan Stanely forecast in November that the U.S. may narrowly escape a recession altogether.
The Bank of America CEO did point to some negative indicators, like a weakening housing market and slowing consumer spending. But Moynihan says the wobbles prove the U.S. economy is becoming more sustainable.
Declining job openings and turnover, in particular, are not good for individual jobseekers, Moynihan says, but they are “actually good signs for the economy in terms of it starting to get into a better situation that it can grow at a more normalized rate.”
Bank of America economists predict that unemployment will increase to 5.5% by next year, according a research note published last week. People losing their jobs is “a horrible thing to contemplate,” Moynihan said on Sunday, but the U.S. has experienced that rate of joblessness before. Prior to the COVID-19 pandemic, the U.S. most recently recorded a 5.5% unemployment rate in May 2015.
“We didn’t feel horrible then,” Moynihan said.
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