Is the US about to enter a recession? Recession in the U.S., the U.K. and the eurozone next year “appears inevitable,” according to Bank of America (NYSE:BAC). This is inevitable after global markets have been subjected to “two significant shocks” this year: inflation and interest rate hikes by the Federal Reserve, the report said.

The economy will fall into a “soft” Recession in the U.S. in the first half of 2023, which is likely to have a negative impact on corporate earnings, and an economic slowdown in Europe is expected this winter, bank analysts predicted.

Inflation is likely to fall in 2023, but “it will take time for central banks to declare victory” over it, according to Candace Browning, head of global research at BofA. So we should also expect the S&P 500 Index, as well as other important indices, to decline.

U.S. interest rates are expected to remain elevated for most of next year. They are not expected to fall until late 2023, MT Newswires quotes experts as saying. The Fed has been raising rates since March to curb inflation.

“Weaker economic growth prospects and higher rates are forcing corporate executives to shift priorities toward reducing debt, moving away from stock buybacks and capex,” the report notes.

As inflation slows, Americans will get “some price relief,” but they may become “less willing to spend” as the unemployment rate is expected to peak at 5.5 percent in the first quarter of 2024, BofA forecasts. By comparison, the nation’s unemployment rate was at 3.7% in November.

Analysts at the bank expect the Standard & Poor’s 500-stock index to end 2023 near 4,000 points lower. It was 3,990.56 points at Monday’s close of trading.

Bonds will look more attractive in the first half of next year, while stocks should do better in the latter part of the year, experts believe.

Earlier we reported that the ECB expects the average wholesale gas price in the euro area to remain unchanged.