Bank of America has revised up its outlook for U.S. growth in the third quarter, citing signs of stronger consumer spending despite ongoing risks to the labour market.
“We remain constructive on the economy. With signs of a rebound in consumption, we mark up 3Q25 growth from 1.0% to 1.5%. As a result, 4Q/4Q growth increases to 1.5%,” BofA analysts wrote in their latest U.S. Economic Weekly note.
The bank said the labour market remains the key downside risk, though it argued that “supply factors explain much of the recent slowdown.”
At the same time, inflation pressures are expected to persist. “Core PCE inflation should get stuck in the low 3s for about a year,” BofA said, adding that long-end rates could rise if the Federal Reserve cuts rates in such an environment, “indicating a policy mistake.”
BofA highlighted that the ISM indexes rose in August, consistent with its view of a rebound in the second half of the year, though auto sales slipped to 16.1 million after a July surge tied to expiring EV tax credits.
Analysts described their “cautious optimism” as premised on labour market resilience, calling today’s August jobs report “pivotal.”
Looking ahead, BofA expects August CPI and PPI to each rise 0.3 percent month-on-month, with core CPI running at 3.1 percent year-on-year. “Based on this, we currently expect Aug core PCE to advance to 3.0%,” it said.
Source :
https://www.investing.com/news/stock-market-news/bofa-lifts-us-q3-growth-view-to-15-on-stronger-consumption-4226339
