After more than a year of doomsday forecasts, a string of recent bullish economic data has led many of Wall Street’s top minds to push back or even retract their recession calls. Take Bank of America chief economist Michael Gapen, for example. The former Barclays exec began his tenure at Bank of America with a bold recession call last July, but has been forced to revise the timing of his forecast on multiple occasions over the past year. And in a Friday note to clients, Gapen admitted that recent data has also “surprised to the upside.” Still, he can’t shake that feeling he had.
Over the past few weeks, first quarter U.S. GDP growth was revised up to 2%; government data showed the U.S. economy added 209,000 jobs in June, pushing the unemployment rate down to 3.6%; and new data from the New York Federal Reserve revealed that Federal Reserve Chair Jerome Powell’s favorite inflation gauge, the core personal consumption expenditures (PCE) index, may be overstating the true level of consumer price increases in the economy. The New York Fed’s new “multivariate core trend” inflation measure came in at just 3.5% in May, well below the 4.6% figure from the core PCE index.
