In a recent private memo obtained by The Intercept, Bank Of America’s executive stated that “we hope” working Americans will lose leverage in the labor market.
Ethan Harris, the organization’s head of global economics research at Bank of America Securities, penned the letter, titled “Mid-year evaluation,” on June 17.
The Intercept reported:
The memo comes as the Federal Reserve attempts to “cool down” the economy, largely on the basis of the same justification—that rising wages are fueling inflation. The Fed raised interest rates this year for the first time since 2018. This has frequently resulted in recessions in the past, and it certainly seems to be the case right now: The Commerce Department reported on Thursday that the gross domestic product fell for the second consecutive quarter, suggesting that a recession may have already begun.
At the time the memo was released to clients, the mid-year review’s emphasis on an impending recession in particular drew news attention. The document has never been published in its entirety before.
Bank of America’s leaked memo stated that they “hope the ratio of job openings to unemployed is down to the more normal highs of the last business cycle”
“The ratio of job opening to unemployed” is generally calculated as the ratio of unemployed people to job opening-the lower the number, the more job opportunities.
The memo further expresses distress about “a record tight labor market,” stating that “wage pressures are…going to be hard to reverse.”
The letter refers to an earlier Bank of America report from 2021 that expressed concern about “very strong momentum in the labor market, suggesting the economy would not just hit but blow through full employment. Fast forward to today, and these trends have been worse than expected.” These trends have been worse than anticipated as of late, the Intercept added.
But even before confirmation that inflation has peaked, the market is starting to price in the chances of interest as an economic downturn takes hold, thanks to President Joe Biden and the Democrats.
While complaining about the bad effect of high wages in raising prices, Bank of America kept silent on the pernicious effects of high profits. Bank of America’s leaked memo clearly depicts how major economic institutions are against the idea of the working class power.
How to reduce inflation while maintaining high levels of employment and worker power is currently the main concern, rather than focusing on the enticing prospect of the Federal Reserve raising interest rates, slowing the economy, and bludgeoning workers back into line as what the memo is focused on.
Read it here: The Intercept
Sources: Westernjournal, Caramesin, Theintercept