Major Banks See Investment Opportunities if Conditions for US Workers Worsen

A leaked memo shows that major financial institutions are hopeful that ordinary American workers will have even fewer employment options in the near future.

The memo was authored by Ethan Harris, who acts as chief of global economics research for Bank of America’s investment banking operation, Bank of America Securities. Harris explained in the June 17 memo obtained by The Intercept that “we hope” the ratio of open jobs to the unemployed workers lessens significantly in the coming months.

The memo is titled a “Mid-Year Review” and is intended to forecast coming conditions for the benefit of Bank of America’s investment clients.

He wrote that the bank expects economic growth and America’s gross domestic product (GDP) to “fade close to zero” by the second half of next year. He attributed the recessionary predictions to the longer-term effects of the Federal Reserve’s continuing interest rate increases.

Harris said that the result will be lowered domestic demand for workers and added that the bank hopes to see that outcome.

The federal Bureau of Labor Statistics reported that as of May there were two job openings for every unemployed person. There were around 11.3 million open jobs and 5.9 unemployed Americans believed to be searching for work.

In July 2009 during the “Great Recession” following the financial crisis of the year before, the ratio stood at more than 6 unemployed workers for every job available.

Just before the COVID-19 pandemic, the ratio slightly favored workers at 0.8 during the strong economy built during the Trump administration. That meant there was just under one open job for every worker seeking employment.

Also at that time, inflation was sitting at an annual rate of 2.5%. That compares to the current rate of 9.1% hammering Americans.

Harris’ memo predicted price inflation will abate as consumer demand eases off and supply chain problems are resolved. He predicted that the tight U.S. labor market will continue to cause inflationary pressure on wages and will be “harder to reverse.”

Many analysts are becoming more willing to admit that the tight labor market is in large part due to recent massive federal spending programs juicing the money supply.

A combination of the $1.9 trillion American Rescue Plan, easy-access Payroll Protection Program cash infusions, and the Biden administration’s crippling energy policies has led directly to inflation levels not seen since the beginning of the aftermath of the Carter administration.

By “hoping” that increased interest rates will slow the economy and loosen the labor market, Harris is stating the Wall Street belief that banks will benefit from worsening conditions for workers.