Bank of America-Merrill Lynch (BAC) said Monday it has “refreshed” its views on the U.S. and global economy for 2014, sharing a mix of slightly good and bad news with investors.
For the first quarter of next year, it expects economic growth of 2.5%, down from its earlier forecast of 2.8%.
The reason? A lack of stronger momentum in recent data, explains economist Ethan Harris.
For the full-year 2014, it’s trimmed its estimate for GDP growth to 2.6% from 2.7%.
But the group remains optimistic, citing “fading” fiscal headwinds that “can be stopped through balance sheet repair.” Plus, says BofA, that repair process is “well advanced,” which sets the stage for both stronger growth and low inflation.
“Inflation is likely to remain stuck close to 1% for an extended period of time,” Harris wrote. “Global pressures have faded as commodity markets cool and emerging markets slow down. There is abundant spare capacity in the U.S. and globally.”
Super-Slow Fed, Global Growth