Us Economy No Signs Of Stagflation

last updated on

Us Economy No Signs Of Stagflation

Us Economy Shows No Signs Of Stagflation, According To Bofa

According to BofA analysts, there are no signs that suggest that the US economy is going through stagflation. They also added that March's PCE data hinted at strong inflation, but it was not as bad as many thought.

Core PCE inflation, along with the headline PCE, showed an increase of 0.32% m/m, while the BofA's forecast was for 0.25%.

Us Consumer Spending Remains Resilience

The BofA analysts also commented on how the spending continues to show an upward trend. Additionally, the saving rate is declining, and the GDP data missed the forecasts.

After looking at all these signs, the BofA believes that it is still too soon to say that the economy is going through stagflation.

As for the PCE inflation and GDP, they added that many are now calling it a negative supply shock or stagflation. However, BofA believes that a view like this is misguided at best. They even went as far as to say that this comparison is similar to comparing apples with oranges.

BofA stated that the GDP miss was mainly driven by inventories and trade. As for the PCE, a resilience in the consumer spending led us to that result.

The bank believes that a knock-on effect was created by a rise in demand, which affected the generated income. Additionally, labor force participation and strong immigration played key roles.

However, even the BofA believes that one can't spin the data positively when it comes to potential rate cuts. In a sense, even the BofA now believes that it is justified to delay the rate cuts.

For now, the inflation is a little high for the Fed's comfort zone. The data coming as of late highlights a strong demand as opposed to the supply shock. This situation has made it easy for the Fed to delay the rate cuts and watch upcoming data.

Trending Stories