Bank of America: Jobless rate will hit 5.6% by end of 2023

Unemployment will soar to 5.6 percent by the end of next year, according to a revised forecast from Bank of America.

The bank raised its forecast for unemployment after the Federal Reserve officials indicated that they think the central bank’s interest rate target will approach five percent next year. The steeper path and higher peak for interest rates makes a “hard(er) landing” more likely, according to a research note from the U.S. economics team led by Michael Gapen. …

“The Fed’s actions suggest to us that it is committed to reducing inflation and it appears willing to accept some deterioration in labor market conditions,” the Bank of America economists wrote.

The bank expects GDP to fall to one percent in the four quarters of 2023. The bank thinks the Fed will raise its target range for the Federal Funds rate to 4.75 to 5.0 percent.