This is Bank of America’s latest forecast for U.S. Economic Growth in the Second Quarter.
Friday’s revision of the second-largest American bank by assets was to lower its estimate for GDP growth for April through June, from 1.5 percent to 0.0 percent. According to the Department of Commerce, this was due to lower-than-expected consumer spending.
“This was the first fall in consumer spending this year in the high inflation and Fed-hawkish increases,” economists at Bank wrote to clients.
The Atlanta Fed’s GDP tracker, GDP NOW, now indicates that publicly available data on the second quarter, mostly from April and May, suggest the economy shrank at a one percent annual rate. That estimate is scheduled to be revised on Friday. on Friday plunged to minus 2.1 percent growth for the second quarter, down from the one percent reading on Thursday.
Commerce Department data on personal consumption expenditures for the first quarter and the month ending May revealed that it has remained flat, or slightly lower, than January’s. This is despite predictions that it would fall as the Fed implemented the largest rate increase in the century. In May, PCE inflation was at 6.3 percent. The Fed’s largest rate hike in a century led to this increase, despite the fact that many predicted it would drop.
Friday’s Institute of Supply Management report revealed that the Institute of Supply Management’s gauge of manufacturing activity fell to its lowest level in five years. This was the time when the economy was at its best before the panic, lockdowns, and pandemics.
Bank of America predicts the economy will grow by 2.3 percent for the whole year. This is compared to 1.4 percent next year and 0.8 percent the year after. This is due to the slow effect of tighter financial conditions cooling the economy. According to the study, there is a 40% chance that there will be a recession next year.