Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

BofA now in favor of a soft landing for US economy

Published 08/02/2023, 08:00 AM
Updated 08/02/2023, 07:56 AM
© Reuters.  BofA now in favor of a soft landing for US economy

BofA analysts told investors in a note Wednesday that it is easy to imagine a no-recession scenario, and the firm has altered its outlook for the US economy.

The analysts explained that recent incoming data has made the firm reassess its prior view that a mild recession in 2024 is the most likely outcome for the US economy.

"Growth in economic activity over the past three quarters has averaged 2.3%, the unemployment rate has remained near all-time lows, and wage and price pressures are moving in the right direction, albeit gradually," the analysts wrote.

In addition, they noted that cyclically sensitive sectors "have shown signs of stabilization."

"We revise our outlook for the US economy in favor of a soft landing, where growth falls below trend in 2024, but remains positive throughout our forecast horizon," they added. "We forecast US GDP growth of 2.0% (4Q/4Q) this year, 0.7% in 2024, and 1.8% in 2025. This is about 0.5pp and 0.7pp higher in 2023 and 2024 than we assumed previously."

BofA still expects inflation to decelerate and remain on a path to 2% but stated that with a stronger forecast for activity and labor markets, inflation will fall more gradually.

As a result, the analysts said if their outlook proves true, it would be good news for the Fed.

"We still expect one additional 25bp rate hike in September for a terminal target range of 5.50-5.75%, though it may slip to November. We now expect the first rate cut in June 2024," they said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.