Anti Reccession:


The American economy's uncertain fate remains a topic of constant speculation among economists and Wall Street experts. Bank of America (BofA) is the latest to weigh in on the debate, challenging the prevailing notion of an imminent recession. In a recent note, BofA's economists cited solid economic growth and a near-record low unemployment rate as reasons to reassess their earlier prediction of a mild recession in 2024.


BofA's stance adds to a growing chorus of voices debunking recession fears. The potential signs of an economic downturn have so far failed to materialize, prompting Insider's Neil Dutta to suggest that the "economic doomsday clock has been reset."


BofA is aligned with Goldman Sachs' Chief Economist, Jan Hatzius, who lowered the odds of a recession in the next 12 months from 25% to 20% in a July bank note.


The Federal Open Market Committee's recent decision to raise interest rates by 25 basis points signalled a shift in its recession outlook. Federal Reserve Chair, Jerome Powell, clarified that while the rate increase aimed at inching closer to the central bank's 2% inflation target, it no longer anticipates a severe economic downturn this year.


This change in the committee's forecast opens the possibility of a soft landing, wherein the Fed can combat inflation without triggering a recession. Treasury Secretary Janet Yellen echoes this sentiment, expressing optimism during an interview that she does not expect a recession, citing encouraging recent inflation data.


Despite these positive signs, some major players remain cautious. Fitch's unexpected downgrade of the US's credit rating, following a contentious debt ceiling battle, foresees a mild recession in the last quarter of 2023 and the first quarter of 2024. While this forecast is met with criticism from government officials and economists, it adds to the ongoing debate over the direction of the American economy.

PRO-RECCESSION: