Bank of America now expecting ‘soft landing’ instead of recession on August 4, 2023 at 8:22 pm Business News | The Hill

Bank of America is now expecting the U.S. economy to experience a “soft landing” instead of a recession, its economists said in a research note this week.

The bank’s economists, who had previously forecast a mild recession in the first half of 2024, revised their outlook on Wednesday, saying they instead expect to see economic growth that “dips temporarily below trend without turning negative.”

“[O]ur revisions imply we no longer expect a mild recession and, instead, think the economy may be able to skirt one,” the research note read. However, it added, “the economy is not entirely out of the woods yet and a mild recession remains our second most likely outcome.”

Bank of America’s revision comes after Federal Reserve Chair Jerome Powell similarly announced last week that the central bank’s staff is no longer forecasting a recession.

“The staff now has a noticeable slowdown in growth starting later this year in the forecast, but given the resilience of the economy recently, they are no longer forecasting a recession,” Powell said.

“I wouldn’t use the term ‘optimism’ about this year,” he added. “I would say there’s a pathway to a soft landing.”

Macro economic numbers came in better than expected in the second quarter of 2023, with gross domestic product (GDP) growing at a 2.4 percent rate, well above the 1.8 percent rate that economists were anticipating.

Inflation has also continued to fall from record-high levels last summer, coming in at 3 percent in June, which represented the smallest annual increase in consumer prices in more than two years.

In response to the recent positive trends, Bank of America said in Wednesday’s research note that it is revising its GDP growth forecasts upwards for 2023 through 2025. The bank’s economists said they now expect a 2 percent growth rate in 2023, 0.7 percent in 2024 and 1.8 percent in 2025.

​Economy, Business, Bank of America, GDP, inflation, Recession, recession fears, soft landing Bank of America is now expecting the U.S. economy to experience a “soft landing” instead of a recession, its economists said in a research note this week. The bank’s economists, who had previously forecast a mild recession in the first half of 2024, revised their outlook on Wednesday, saying they instead expect to see economic…