The brokerage no longer expects a mild recession in 2024 and sees real gross domestic product growing 2.0% on average this year, up from a previous forecast of 1.5%.
Data last week showed the U.S. economy grew faster than expected in the second quarter as a resilient labor market supported consumer spending, while businesses boosted investment in equipment and built more factories.
“Growth in economic activity over the past three quarters has averaged 2.3%, the unemployment rate has remained near alltime lows, and wage and price pressures are moving in the right direction, albeit gradually,” BofA economists said.
Morgan Stanley (NYSE:MS) recently raised its economic growth forecast on hopes of a “soft landing”, where inflation falls without a recession or big job losses, while Citigroup (NYSE:C) and Goldman Sachs (NYSE:GS) increased their S&P 500 year-end target.
BofA now expects interest rate cuts by the U.S. Federal Reserve at a slower rate beginning in June, followed by quarterly 25-basis point reductions for a total of 75 bps of rate cuts in 2024. The brokerage sees 100 bps of cuts in 2025.
Source: Economy - investing.com
