Boom Ahead: BofA Analysts Predict Rapid Economic Expansion

Contrary to the dominant narrative of a sluggish recovery and lingering stagflation concerns, Bank of America (BofA) analysts are predicting a potential economic boom in the United States. According to a recent note from the BofA Research team, the next phase for the US economy and equities may not be a routine cyclical recovery, but an outright expansion.

The analysts cite several key factors that support their bullish case. First, they argue that with the US midterm elections just a few quarters away, policymakers have a strong incentive to pursue near-term, pro-growth initiatives. Second, they point to the "One Big Beautiful Bill Act" (OBBBA) targeting domestic manufacturing as a potential catalyst. Third, the analysts highlight the massive stimulus packages being enacted globally, including Germany's historic EU-level measures and reflationary forces building elsewhere.

Additionally, BofA sees a broad expansion of capital expenditures, with major tech companies like Amazon, Meta, Microsoft, and Alphabet planning nearly $700 billion in investments between 2025 and 2026. The analysts also note that more non-US companies are looking to expand their manufacturing capacity in the US, while municipalities are focused on updating aging infrastructure.

Lastly, BofA's proprietary "Regime Indicator," a blend of macroeconomic signals, is on the verge of flipping from a "Downturn" to a "Recovery" phase. Historically, this change has preceded a rally in value stocks. Despite the dominant narrative still being conservative, with 70% of fund managers predicting stagflation in June, BofA argues that the catalyst for an upside breakout is real and imminent.