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May 21 - 11:00 AM

USD: Revising US GDP Forecasts: How Low Can It Go? - BofA

By eFXdata  —  May 20 - 12:20 PM

Bank of America Global Research revises its forecast for US GDP TO -8% this year and +4% next. This is, according to BofA, represents  a 13% drop from the peak, more than 5X the avg post-war recession.

"We believe that a helpful way to think about this cycle is in phases. We see three: phase 1 is the shutdown, phase 2 is the transition and phase 3 is the recovery. We have tweaked our assumptions in each phase - bigger drop in phase 1, stronger bounce in phase 2 but weaker recovery in phase 3. These changes reflect the recent data and the early reopening. Our forecast leaves annual GDP to decline 8.0% this year with a 4.0% rebound next year," BofA notes. 

We have pulled a variety of indicators which can help offer clues. As we examine the data, it is important to keep in mind that many indicators will show a significant bounce as the economy moves out of hibernation. But what initially looks like a V-shaped recovery is set to lose steam after the initial gain has subsided," BofA adds. 

Source:
BofA Global Research

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