BofA Global Research raises US growth forecast on ‘soft landing’ expectation
BofA Global Research on Wednesday forecast a “soft landing” for the U.S. economy and increased its 2023 economic growth outlook for the country on the back of incoming data.
The brokerage no longer expects a mild recession in 2024 and sees real gross domestic product growing 2 percent on average this year, up from a previous forecast of 1.5 percent.
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 percent, the unemployment rate has remained near all-time lows, and wage and price pressures are moving in the right direction, albeit gradually,” BofA economists said.
Morgan Stanley recently raised its economic growth forecast on hopes of a “soft landing”, where inflation falls without a recession or big job losses, while Citigroup and Goldman Sachs 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.