Back in January, Bank of America was one of many investment banks that believed the U.S. economy was barreling toward recession. With the Federal Reserve raising interest rates at a breakneck pace to fight inflation, the economy would eventually slow to standstill, the bank warned. But as the year went on, economic data pleasantly surprised Wall Street, leading Bank of America’s chief U.S. economist Michael Gapen to begin shifting his recession forecast.
In June, Gapen argued that instead of facing a mild recession as early as the fourth quarter of 2023, the U.S. was likely to fall into an even more tame “growth recession” in 2024. Then, in August, he scrapped the recession call altogether because of the resilience of the labor market and consumer spending amid the Fed’s aggressive rate hikes. Parroting some Beatles lyrics, Gapen titled the note where he detailed his new, more optimistic forecast: “Imagine no recession, it’s easy if you try.”
