Bank of America warns of looming economic slowdown

A major U.S. bank has issued a dire forecast for the global economy.

Over a month has passed since Russia invaded Ukraine, causing an unforeseen and long-term effect on the global economy. Global institutions have begun sounding the alarm that we are on the verge of a recession because of an inflation problem that was already spiking the prices of virtually every commodity.

In an investment strategy report sent to clients on Thursday, Bank of America analysts warned that inflation always precedes recessions, and that tighter monetary policies being put in place to control surging prices make a recession shock.

Inflation has been a problem for the U.S. economy for months, and rates have hit new highs since the war began. The annual inflation rate jumped to 7.9% in February, the highest it has been in four decades, and the latest forecasts suggest March's rate could reach 8.5%. It would be the highest rate since 1981.

The Federal Reserve has been focused on the problem for months and has begun hiking interest rates in an effort to temper demand.

The yield curve has inverted because of higher interest rates, which means that short-term yields are more attractive than long-term ones. A surge in short-term yields is an indicator that investors believe the immediate future of the market is better than the long-term view.

BofA analysts say this is a sign of a recession.

As recessions begin, yield curves always steepen, according to the report.

BofA is one of many financial institutions warning about the likelihood of a recession.

Market-watchers caution that an economic slowdown is a reasonable outcome to assume, given current low unemployment numbers in the U.S. and rising inflation rates. A growing list of billionaires, global investors, and Wall Street personalities have expressed more and more certainty that the trends we are seeing point to a recession.