• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

BofA Revises Long-Term GDP Forecast, Sees No US Recession During Next Decade

Tyler Durden's picture


Who cares about their atrocious Q1 GDP forecast (because of "snow" of course), or how much El Nino, La Nina, or any other climatic conditions will impact their Q2, Q3, Q4 and so on economic prediction?

Bank of America that's who.

In what should be the biggest joke of the day, Bank of America has just released its GDP forecast not for the next several quarter, but making a mockery of the IMF's 2022 Greek GDP forecast, it predicts US growth for the next decade!

The punchline: after expecting a surge in growth to 3.4% in 2016, the bailed out bank tapers off its forecast which evens off at 2.2%... some time in 2025. And throughout this period its crack economist team headed by Ethan Harris anticipates precisely.... zero recessions.

Indeed, in what will be a first time in history, the US is expected to grow for 16 consecutive years since its last official, NBER-defined recession (which "ended" in the summer of 2009) without entering a recession.

Here is how Harris explains this joke:

Obviously, there is considerable uncertainty in forecasting many years out, so these should be viewed as rough baseline numbers. For example,if history is our guide, at some point in the next decade the US will experience a recession, but predicting a recession far in advance is almost impossible.

Well, why not. Considering Biotech ETFs just arbitrarily exclude any negative and low earnings companies from their basket P/E calculation, it only makes sense that when predicting US growth one simply excludes all the recessions.

More humor from Bank of America:

Long-run forecasting is very different than short-run forecasting. Some of the key assumptions we use are as follows:


1. We expect real GDP growth to converge to potential growth after 2016, which we expect to be around 2.2%.

2. We expect that the long-run unemployment rate (the NAIRU) resides around 6%, due in part to demographic factors.

3. We expect the Fed to on average hit its 2% target for the PCE deflator, and the other inflation numbers are modeled off that assumption.

4. We expect interest rates to converge to slightly lower long-run levels due to ongoing fiscal headwinds and lower potential growth

Or, said otherwise, "we took a long-term GDP chart and extrapolated." Hence: value added.

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Fri, 05/09/2014 - 10:14 | 4743171 SelfGov
SelfGov's picture



If it doesn't happen before oil production peaks in the US again it will happen shortly after.

Fri, 05/09/2014 - 10:27 | 4743227 Pladizow
Pladizow's picture

BOA = Bag of Ass forecasting.

Fri, 05/09/2014 - 10:41 | 4743266 Manthong
Manthong's picture

I think I finally figured out how the Fed and bankers think policy really works.



Fri, 05/09/2014 - 10:43 | 4743286 Tabarnaque
Tabarnaque's picture

Whatever these clowns are smoking must be really strong.

Fri, 05/09/2014 - 11:11 | 4743417 Dr. Engali
Dr. Engali's picture

I'm pretty sure they are smoking this:



Fri, 05/09/2014 - 11:56 | 4743634 Keyser
Keyser's picture

Obviously someone showed up at BofA corp HQ with a shipment of nail guns for the C-level folks... 

Fri, 05/09/2014 - 10:43 | 4743275 Smegley Wanxalot
Smegley Wanxalot's picture

And BoA is so certain of this prediction they are willing to put your money where their mouths are ... whether you like it or not.

On the bright side, BoA says inflation will be very low for the next decade, and housing is gonna boom. Makes me wanna go out and buy more shit-nobody-needs.

Fri, 05/09/2014 - 11:27 | 4743489 Greenskeeper_Carl
Greenskeeper_Carl's picture

thats all i needed to hear. selling my pms and pouring into a triple levered s&p fund...

Fri, 05/09/2014 - 10:42 | 4743282 eclectic syncretist
eclectic syncretist's picture

In other news Bank of America said it is not technically bankrupt, holds every employee to the highest moral standards, and that the next iteration of the hundred dollar bill will have a picture of a unicorn shitting skittles as it jumps over a rainbow.

Fri, 05/09/2014 - 10:48 | 4743300 Kaiser Sousa
Kaiser Sousa's picture

gonna steal that one...

Hew Banzi - graphic please.

Fri, 05/09/2014 - 10:47 | 4743301 CrimsonAvenger
CrimsonAvenger's picture

BOA = Bunghole Opening Approaching.

Fri, 05/09/2014 - 11:11 | 4743418 Chief Wonder Bread
Chief Wonder Bread's picture

BOA forecasting = {Bitch On Adderal} forecasting.

Fri, 05/09/2014 - 12:21 | 4743713 OldPhart
OldPhart's picture

Isn't Taint of America the same outfit that overlooked about $4 billion in funds with their financials?

With accounting like that, I imagine they can forecast the shit out of the weather, too.

But, really, can you have a recession in the midst of the greater depression?

Fri, 05/09/2014 - 20:20 | 4745254 StychoKiller
StychoKiller's picture

BOA -- definitely gone round the twist!

Fri, 05/09/2014 - 10:32 | 4743246 TBT or not TBT
TBT or not TBT's picture

Govt pension funds are saved! This kinda GDP growth plus ZiRP, that's your gold plated 8% right there. Shop till you drop unionized parasites, live the dream.

Fri, 05/09/2014 - 10:40 | 4743273 Kaiser Sousa
Kaiser Sousa's picture

"It is difficult to get a man to understand something, when his salary depends on his not understanding it."

Upton Sinclair

Fri, 05/09/2014 - 10:44 | 4743290 remain calm
remain calm's picture

BOA this is great news. My weather man just forcasted sunny and 76 for the next 10 years. What a fucking coincidence, its amazing how our predictive power has improved with these new super computers.

Fri, 05/09/2014 - 11:47 | 4743590 GlobalCtzn
GlobalCtzn's picture

These twits have it all figured out. They control the markets. They control the weather. They are not manipulators, they are masters. Nothing but solid growth and blue skies ahead folks.............

Fri, 05/09/2014 - 10:14 | 4743172 Fukushima Sam
Fukushima Sam's picture

Moar printing.

Fri, 05/09/2014 - 10:30 | 4743238 101 years and c...
101 years and counting's picture

One can safely assume printing is involved in this "forecast"? I wonder if their baseline is $500B per year and then increase by 10% per year?  So, by 2022, the Fed's balance sheet will be $20 Trillion, which would = inflation ramped GDP.

Fri, 05/09/2014 - 10:30 | 4743240 Flux
Flux's picture

I don't know about you, Sam, but I'm gonna rather enjoy watching Zero Hedge go throught the 5 stages of grief...

I think we're at Denial right now.



Fri, 05/09/2014 - 10:32 | 4743244 Flux
Flux's picture

Or have we moved into Anger?

Fri, 05/09/2014 - 10:38 | 4743270 Tenshin Headache
Tenshin Headache's picture

Still on Patience.

Fri, 05/09/2014 - 10:55 | 4743339 Redneck Hippy
Redneck Hippy's picture

Definitely Anger.  I don't think Patience is in there. Plus most ZHers have none of it.

Fri, 05/09/2014 - 11:38 | 4743544 Greenskeeper_Carl
Greenskeeper_Carl's picture

why don't you educate us then, genius. All of our growth since around the year 2000 has been based on fed money printing, and artificially low interest rates. Thats it. which means we haven't had any reall growth for over a decade. You can't maintain a comsumption based economy that only functions on the perpetual creation of moar debt forever. We are now approaching that stage where this reality comes true. How could we have growth for the next decade without a recession when we have been in a depression for the last 14 years. The only reason we don't have soup lines with thousands lined up aroudn the block is that soup kitchens have been replaced by SNAP cards. Those soup lines are now at your local walmart

Fri, 05/09/2014 - 10:14 | 4743174 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

WOW! Our dear leader has saved us again. Sell you a bridge for a good price. ;)

Fri, 05/09/2014 - 10:15 | 4743176 Kreditanstalt
Kreditanstalt's picture

There's obviously some problem with how these banks and governments measure "GDP" (whatever that is...) and how the rest of us see it...

Fri, 05/09/2014 - 10:48 | 4743302 eclectic syncretist
eclectic syncretist's picture

What will continue to expand is the amount of their monopoly money available to be loaned at interest.  Maybe they can keep credit expanding forever, if our imaginations allow for it, and loan forgiveness/defaults become the norm and are of little or no consequence.  It's value is completely imaginary, after all.

Fri, 05/09/2014 - 11:18 | 4743436 Pool Shark
Pool Shark's picture




Remember that:

GDP = C + I + G + (Ex - Im)

Where G = Government Spending.

If you subtract all the QE and deficit spending since 2008; the 'Great Recession' never ended.

Clearly, BoA expects the deficit spending to continue.




Fri, 05/09/2014 - 11:39 | 4743549 CPL
CPL's picture

The equation only works if governments are honest about how broke they are.  The likeihood of that happening today is around 0.

Fri, 05/09/2014 - 10:15 | 4743178 ParkAveFlasher
ParkAveFlasher's picture

B of A forecast = analytical rice-a-roni. 

Fri, 05/09/2014 - 10:15 | 4743181 Commodore64
Commodore64's picture

And they lived happily ever after....


The End.

Fri, 05/09/2014 - 10:17 | 4743190 James-Morrison
James-Morrison's picture


Fri, 05/09/2014 - 10:20 | 4743203 OC Sure
OC Sure's picture

Power Point.

Fri, 05/09/2014 - 10:23 | 4743214 Ignatius
Ignatius's picture


Fri, 05/09/2014 - 10:26 | 4743226 Hulk
Hulk's picture

A baby's arm holding an Apple !!!

Fri, 05/09/2014 - 13:49 | 4744108 L G Butz PhD
L G Butz PhD's picture


Fri, 05/09/2014 - 10:17 | 4743189 Bay of Pigs
Bay of Pigs's picture

Good grief. This garbage isn't worth reading.

Is it Happy Hour yet?

Fri, 05/09/2014 - 10:27 | 4743230 Ness.
Ness.'s picture

It's 5 o'clock somewhere ;)



Fri, 05/09/2014 - 10:20 | 4743200 OC Sure
OC Sure's picture




There is an inverse relationship which is immutable between tyranny and productive growth.

BOA's prediction will come true only to the degree that tyranny is rolled back.

We live in tyranny.

Fri, 05/09/2014 - 10:20 | 4743207 monopoly
monopoly's picture

This has to be a spoof. Not even BofA would spill forth dribble and crap like that. Then again, this is the worst bank on the planet. Oh well.

Fri, 05/09/2014 - 10:28 | 4743208 Dr. Engali
Dr. Engali's picture

Of course they see no recession, due to the fact that we can't get out of the fucking depression we have been in since 2000.

Fri, 05/09/2014 - 11:29 | 4743496 Greenskeeper_Carl
Greenskeeper_Carl's picture

exactly. at this point a mere ressecion would be an improvment

Fri, 05/09/2014 - 10:25 | 4743213 youngman
youngman's picture

If you look at our labor force reducing...more people on EBT cards and Disability payments....the baby boomers getting older and retiring maybe...Obamacare in full force...a flood of illegal immigrants....not gonna happen...even Apple buying Beats is not going to turn this country around..I am pretty negative..but to many people on the government teat now to turn around

Fri, 05/09/2014 - 10:24 | 4743218 slightlyskeptical
slightlyskeptical's picture

In the history of long term forecasts like this I doubt any of them ever included a recession several years down the road. As such any such long term forecast always has and always will be uselesss.

Fri, 05/09/2014 - 10:26 | 4743222 Ban KKiller
Ban KKiller's picture

"Our accounting is flawless". "We are a trusted name in banking". Bank of America, a continuing criminal enterprise.  

We beat Bank of America in court the other day using this New MEXICO Supreme Court Decision...Romero V. BONY. Bank of New York? Fuck you too! Ha-ha-ha. AND NOW the Romero's are have filed their countersuit! Banksters are being beaten in NM and they are not happy to no longer stealing houses. 

Fri, 05/09/2014 - 10:27 | 4743232 DavidC
DavidC's picture

You're on fire today! Brilliant!


Fri, 05/09/2014 - 10:29 | 4743237 wmbz
wmbz's picture

Pure tripe, and to think these clowns get a paycheck! I picked the wrong path in life I could write much more interesting fantsy bullshit!

Fri, 05/09/2014 - 10:34 | 4743251 Second Class Ci...
Second Class Citizen5's picture

Technically speaking BofA did not get into trouble, they bailed out Merrill Lynch. 

Fri, 05/09/2014 - 10:34 | 4743253 eucalyptus
eucalyptus's picture

is melissa meyer still over there? Great ass on that one. 

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