{"id":44765,"date":"2025-07-29T09:34:10","date_gmt":"2025-07-29T09:34:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/44765\/"},"modified":"2025-07-29T09:34:10","modified_gmt":"2025-07-29T09:34:10","slug":"not-just-a-cyclical-recovery-but-a-boom-bofa-says-a-key-tail-risk-is-that-the-trump-economy-will-actually-start-to-take-off","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/44765\/","title":{"rendered":"\u2018Not just a cyclical recovery, but a boom.\u2019 BofA says a \u2018key tail risk\u2019 is that the Trump economy will actually start to take off"},"content":{"rendered":"

In a market landscape still fixated on fears of stagflation and modest recoveries, Bank of America<\/a> is sounding a contrarian\u2014and decidedly bullish\u2014note.<\/p>\n

According to new note<\/a> from BofA Research analysts, the next phase for the U.S. economy and equities might not be a routine recovery, but an outright boom. <\/p>\n

\u201cToday\u00a0a confluence of factors argue\u00a0that the key\u00a0tail risk that may not be priced in\u00a0is not just a\u00a0cyclical\u00a0recovery, but a\u00a0boom,\u201d they said.<\/p>\n

5 reasons for a boom<\/p>\n

BofA analysts cited five pillars supporting this more bullish case. <\/p>\n

First is political will, arguing that with U.S. midterm elections a few quarters away, policymakers have strong incentive for near-term, pro-growth initiatives.<\/p>\n

Second is Washington\u2019s \u201cOne Big Beautiful Bill Act\u201d (OBBBA) targeting domestic manufacturing. <\/p>\n

Third is the massive overseas jolt gathering, with Germany recently enacting the largest stimulus package in EU history, while global reflationary forces are building elsewhere.<\/p>\n

Fourth, BofA sees a broad expansion of capital expenditures, with hyperscalers such as Amazon<\/a>, Meta<\/a>, Microsoft<\/a>, and Alphabet<\/a> set for nearly $700 billion in capital expenditures between 2025 and 2026. In addition, more non-U.S. companies plan to expand manufacturing capacity in the U.S., while municipalities are focused on updating aging infrastructure.<\/p>\n

Fifth, BofA cited its proprietary \u201cRegime Indicator,\u201d a blend of macro signals including corporate revisions to earnings per share, GDP forecasts, and other emerging signals. It\u2019s on the verge of flipping from a \u201cDownturn\u201d to a \u201cRecovery\u201d\u2014a change that historically presages a rally in value stocks.<\/p>\n

The dominant narrative in this indicator remains conservative, according to the BofA team, led by Savita Subramanian. In June, 70% of fund managers still predicted stagflation, with only 10% foreseeing a \u201cboom\u201d of above-trend growth and inflation. Yet, BofA argues, the catalyst for an upside breakout is real and imminent. If the Regime Indicator does indeed flip to \u201cRecovery\u201d in early August, historical precedent suggests a rapid rotation is likely.<\/p>\n

So how healthy are these five factors actually looking?<\/p>\n

Will there be enough spending?<\/p>\n

Top economies have already pledged massive stimulus. In March, China unveiled plans to issue 1.3 trillion yuan ($179 billion) in special treasury bonds this year, plus 4.4 trillion yuan of local government special-purpose bonds.<\/p>\n

Meanwhile, much of the EU\u2019s stimulus<\/a> still flowing from the earlier NextGenerationEU<\/a> package is worth up to \u20ac806.9 billion (about $880 billion) through 2026. Major European economies have supplemented this with additional investments and, in some cases, targeted fiscal expansion.<\/p>\n

Japan, South Korea, Canada, and Australia have adopted smaller-scale but still significant fiscal measures in 2025 to address sector-specific slowdowns, energy security, and household purchasing power. Most are focusing on targeted transfers, green investments, and industrial support.<\/p>\n

Meanwhile, American companies have announced billions<\/a> in new U.S. manufacturing, infrastructure, and technology investments since Trump took office, but these initiatives were announced before passage of the OBBBA. <\/p>\n

Many investments are phased and slated for completion over the next decade, and it\u2019s unclear how much can come online soon enough to play a role in the boom that BofA Research is projecting. Some of them, such as OpenAI\u2019s $500 billion Stargate project, are reportedly struggling<\/a> to raise funding to match the big numbers initially announced.<\/p>\n

For this story,\u00a0Fortune\u00a0used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"In a market landscape still fixated on fears of stagflation and modest recoveries, Bank of America is sounding…\n","protected":false},"author":2,"featured_media":44766,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[28,101,5411,5948],"class_list":["post-44765","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-fortune-intelligence","tag-tariffs-and-trade"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/44765","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=44765"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/44765\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/44766"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=44765"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=44765"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=44765"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}