From a big-picture perspective, BofA Global Research economists say, “The broad outlook is that the labor market is still strong and consumer demand has held up. Headline inflation appears to have peaked. Food inflation remains a problem, but the drop in gas prices from their summer highs has been a pretty significant tailwind.” BofA Global Research economists expect a recession to begin in early 2023 but say it will be “probably quite mild, not particularly bad by historical standards.”
Although Bank of America’s experts remain wary of predictions, everyone is in agreement that the market is overdue to return to normal conditions, and there will be great opportunities when it does begin to turn.
Says Matthews, “We need better visibility before the investment market returns to normal. We’d need to see the labor market weakening a bit, a key piece to inflation getting under control. Food and wage inflation easing would make it easier for buyers and sellers to agree on the margin snapshot. I’m hopeful we will see this in 2023.”
Still, Short says, “People are gearing up to take advantage of what’s happening. Folks that have capital are getting excited about finding some good deals. A lot of people with cash know that there are opportunities out there to pick up a good set of stores at a low price.”
Restaurant group head for Bank of America, Cristin O’Hara, concludes, “I’m hopeful about 2023 in the sense that it has to be better than 2022. We’ll have more information as we come to the close of the year; we’ll have a better handle on where the troughs are for brands, and whether we’ve hit bottom. And when we do figure that out, there will be opportunities going forward. Right now, there still are a lot of people sitting on the fence. But hopefully in 2023, we’ll get back to normal.”