Bank of American lowers third quarter estimate
Earlier this month, Goldman Sachs lowered its Q3 GDP forecast to 5.5% from 9.0% on delta slowing the recovery. Now Bank of America is doing the same.
They cut Q3 to 4.5% from 7.0% " in response to the recent softening in consumer spending on the back of rising Covid-19 infections .. though we expect growth to reaccelerate to 6% in Q4 and Q1 next year, as supply-side disruptions ease."
The Fed is undoubtedly seeing the same trends as these Wall Street firms and will also be marking down the pace of recovery, something that should ease the pressure on inflation and slow employment growth.
The baseline is that the gains are simply pushed out to Q4 and beyond but some at the Fed will want to see it before they believe it, especially due to risks of other covid strains emerging.
