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Let The Kool Aid Flow: Bank Of America "Predicts" No Recession In The Next Decade

Tyler Durden's picture




 

One year ago, as part of its always entertaining long-run forecasting exercise, Bank of America predicted that GDP growth in 2015 and 2016 would be 3.3% and 3.4% respectively.

Fast forward one year, when in its updated "long-run" forecast, Bank of America's crack economist Ethan Harris admits he was off by "only" 30% in his prediction of next year's GDP, and instead of 3.3%, he now "forecasts" 2015 GDP to be... 2.3%.

Not only that, but BofA has now also taken down all over its medium-term GDP forecasts lower by 0.4% and its terminal growth rate is now down 10% from 2.2% to 2.0%. Expect next year to see the first sub 2% potential growth rate of the US.

This is how he justified his dramatic overestimation of US growth in just 12 months:

1.We expect real GDP growth to converge to potential growth after 2016, which we expect to be around 2.0%.
2. We expect that the long-run unemployment rate (the NAIRU) resides around 5.0%, due in part to demographic factors.
3. We expect the Fed to hit its 2% target for the PCE deflator by 2018.
4. We expect interest rates to converge to slightly lower long-run levels due to ongoing fiscal headwinds and lower potential growth.

Compare these revised assumptions to what he penned just one year ago here.

But the biggest laugh line, like last year, is the following:

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. We plan to update this table on a regular basis.

So to summarize, the chief economist of a TBTF bank was off in his one year forward "forecast" by 30%, but because prediction a recession "far in advance", even if in reality one may very well already be taking place, he would rather just assume 2% or greater growth for the next decade, and just leave it at that.

Because clearly Bank of America's clients don't pay with millions of soft dollars for someone to actually tell them the truth.

 

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Thu, 08/06/2015 - 19:08 | 6399327 Falling Down
Falling Down's picture

Heyyyyyyyyyyy, Kool Aid!

Thu, 08/06/2015 - 19:20 | 6399361 Looney
Looney's picture

Is it really necessary to DRINK Kool Aid?

Can it be snorted, shot-up, sniffed, taken vaginally or urethrally (sp?), or both?   ;-)

Looney

Thu, 08/06/2015 - 19:24 | 6399374 Antifaschistische
Antifaschistische's picture

"if history is our guide"

..at what point in history is he referring to where our national debt was 100%+ of GDP, approaching 19T...corporate debt was at record levels, state & local debt at record levels, etc...?

we are making history buddy.

Thu, 08/06/2015 - 19:32 | 6399397 Save_America1st
Save_America1st's picture

so they don't realize that all numbers, statistics, calculations and models are completely fake, fraudulent, lies?

 

Get outta the bankster system now if you haven't already...just get the fuck out before this whole thing comes crashing down all over again.

Thu, 08/06/2015 - 19:53 | 6399451 Deathrips
Deathrips's picture

Says a bank charging 18% + interest on money they create out of nothing....with no collateral.

 

RIPS

Thu, 08/06/2015 - 20:05 | 6399476 johngaltfla
johngaltfla's picture

Crack don't smoke itself.

Thu, 08/06/2015 - 20:54 | 6399638 philipat
philipat's picture

They're probably correct if Official Government statistics are the measure. Any negative GDP Quarter is now "Double Seasonally adjusted" and, if still negative, Triple adjusted. So, Officially, recessions have now, along with Equity market declines, been banned. Welcome to The Matrix....don't fight The Fed and don't even THINK about buying Gold because there are NO escapes for the plebs.

Fri, 08/07/2015 - 03:12 | 6400355 cookie nookie
cookie nookie's picture

Personally, I'm cool with poverty.  I just need free health care and a FEMA trailer.  Working for a living sucks.  Thanks for listening.

Thu, 08/06/2015 - 19:50 | 6399435 Winston Churchill
Winston Churchill's picture

Goldman only do suppository's.Shaped like a giant dildo.

Thu, 08/06/2015 - 19:09 | 6399329 stant
stant's picture

Deflationary depression , of the bone crushing type.

Thu, 08/06/2015 - 19:09 | 6399334 thismarketisrigged
thismarketisrigged's picture

why so critical, bank of america is right for once, there will be no recession within the next 10 year.

 

WE WILL STILL BE IN A FUCKING GREAT DEPRESSION, THEY WILL BE WISHING FOR A RECESSION

Thu, 08/06/2015 - 19:25 | 6399375 buzzardsluck
buzzardsluck's picture

Great comment, beat me to it.  This country is SO fucked.

Thu, 08/06/2015 - 23:26 | 6400024 runswithscissors
runswithscissors's picture

Thou shall not question the Bank of the Northern Hemishere!!!

Thu, 08/06/2015 - 21:09 | 6399684 Muppet
Muppet's picture

I hate it but BOA is very sadly right.   Things will drag on for years.   I wish it were otherwise.

Thu, 08/06/2015 - 19:13 | 6399346 i_call_you_my_base
i_call_you_my_base's picture

In the coming decade:

1) I expect Bank of America to implode

2) I expect their depositors' funds to get corzined

Thu, 08/06/2015 - 19:52 | 6399447 Winston Churchill
Winston Churchill's picture

Ten months ?

Sounds right.

Thu, 08/06/2015 - 19:14 | 6399348 yogibear
yogibear's picture

As Richard Duncan said, The Federal Reserve must continue QE. So expect QE4 and QE5.

Until a currency crisis.

Thu, 08/06/2015 - 19:14 | 6399349 dojufitz
dojufitz's picture

I love that little fella......gonna put him on a t=shirt...................OH YEAH!

Thu, 08/06/2015 - 19:15 | 6399351 nmewn
nmewn's picture

"We've made recessions a thing of the past, this is a new economy!"-Rubin or Bubba, can't remember.

Thu, 08/06/2015 - 19:15 | 6399353 atthelake
atthelake's picture

BoA had a branch in the local Stop and Shop. When their lease ran out, the town asked them to leave town. They put an ATM in a nearby building with their sign out front but they are gone.

Thu, 08/06/2015 - 19:15 | 6399358 mtndds
mtndds's picture

I want to smoke some of that shit that they are smoking.  Good god that must be some good shit to make someone think there wont be another recession for in 10 years.

Thu, 08/06/2015 - 19:53 | 6399452 Winston Churchill
Winston Churchill's picture

They left out admitted.

Thu, 08/06/2015 - 19:19 | 6399367 davidalan1
davidalan1's picture

Kenneth Lay:  "I would invesst in Enron right now, we are stronger than ever"

Thu, 08/06/2015 - 19:25 | 6399377 willwork4food
willwork4food's picture

Ken Lay's got his own problems being on the 5th or something level of hell. *

*Escape from Hell; Niven & Jerry P. 2nd book post "Inferno".

Great read imho...and yes they do mention Ken Lay by name.

Thu, 08/06/2015 - 19:28 | 6399390 davidalan1
davidalan1's picture

And what level is Skilling?

Thu, 08/06/2015 - 19:31 | 6399394 messymerry
messymerry's picture

Only the fifth?  Dude!, they've been adding on.  Hell is down to 43 levels, and that doesn't include the really really hardcore pit where the bwankers reside.  The bwanker section adds another baker's dozen of levels.  It gets really hot down there...

;-D

Thu, 08/06/2015 - 19:50 | 6399439 willwork4food
willwork4food's picture

I'm only quoting from the book, but you bring up a good point that they added in their 2nd book: Hell IS expanding, with different sins & punishments, expanding further from the depth where Satan resides in a sheet of ice. Many of the bankers are buried many feet below the ice, which is there from the constant flapping of Satan's wings.

One of the new remarkable features were the builders that were condemmed for waste, knowing bad archetectual designs, environment neglect that were in a level with thousands of other builders that were condemmed for the same trying to build a high rise from the bottom pits of hell. The only problem was if they got the design slightly wrong, the whole building would collapse around all of them which meant a LOT of pain...pain..pain, until they healed. (They are dead so cannot die again, but can feel pain.) Then they either tried it again or got the message and moved on. (free will)

Btw, this was from Dante's Divine Comedy.

Thu, 08/06/2015 - 19:56 | 6399453 Winston Churchill
Winston Churchill's picture

Aren't we all in hell already, being sodomized by bankers daily fits that bill..

Thu, 08/06/2015 - 20:42 | 6399592 RaceToTheBottom
RaceToTheBottom's picture

Well, we ain't in Heaven, that's for damn sure.

Thu, 08/06/2015 - 19:34 | 6399408 Vendetta
Vendetta's picture

If sipping an umbrella drink in some place like Fiji is the 5th circle of hell, then yes he is likely there.

Thu, 08/06/2015 - 19:22 | 6399370 messymerry
messymerry's picture

"Bank of America's crank economist Ethan Harris"

FTFY,,,

FWIW:  anybody that believes anything the Mammonites tell you is a skxawng (moron in Na'vi...).

Off with their collective heads!

;-D

Thu, 08/06/2015 - 19:26 | 6399382 Budnacho
Budnacho's picture

Well Shit, that's certainly a load off my feet I'm tellin ya!......Time to put the kid's college fund into Apple and Netflix!.....can't lose! BUY EVERY MOTHERFUCKING DIP BITCHEZ!!!!

Thu, 08/06/2015 - 19:31 | 6399392 JC-BI
JC-BI's picture

I ain't drinking this Kool-Aid ;-))

Thu, 08/06/2015 - 19:31 | 6399393 astitchintime
astitchintime's picture

Warning:  Totally off-topic here.

Tylers, I do hope y'all are planning on providing a live stream to the GOP debate.

I noticed that it is not on local tv and since I gave up cable/dish/whatever years ago, well golly gee Iam feeling a little deprived here!

Not that I intend to #1 vote (are you serious)

Or #2 I care (N O T)

But, ya know I thought it might be entertaining to see

*_*

Thu, 08/06/2015 - 19:36 | 6399410 Consuelo
Consuelo's picture

 

"Bank of America's crack economist Ethan Harris admits he was off by "only" 30% in his prediction of next year's GDP, and instead of 3.3%, he now "forecasts" 2015 GDP to be... 2.3%"

 

'Crack' economist about sums it up...    Stoke that pipe a little more buddy...    

Thu, 08/06/2015 - 19:48 | 6399432 Chuck Knoblauch
Chuck Knoblauch's picture

Most of them are taking drugs.

Thu, 08/06/2015 - 19:38 | 6399412 Ban KKiller
Ban KKiller's picture

Bank of America, now that is a name to be trusted. By fools. 

Thu, 08/06/2015 - 19:47 | 6399424 Chuck Knoblauch
Chuck Knoblauch's picture

Bullshit, we are in a depression.

BoA just doesn't get it.

This is the USA.

The only thing American about them is in name only.

Thu, 08/06/2015 - 20:04 | 6399472 FreeShitter
FreeShitter's picture

When it comes to banks and financial institutions, this is JEW.S.A

Thu, 08/06/2015 - 20:02 | 6399470 Sanity Bear
Sanity Bear's picture

I can safely predict no future recession ever.

 

As long as the definition of recession relies on government numbers anyway.

 

At least the chocolate rations keep going up.

Thu, 08/06/2015 - 20:11 | 6399491 carlnpa
carlnpa's picture

My economic indicator is the cost differential between regular gas and diesel.

Diesel has about 130,000 btu/gallon, ethanol gas 111,000 btu'gallon.

So the energy density of diesel is greater than gasoline and so is the price.

Except in a recession.

When the cost of regular gas equals diesel it indicates significant lack of industrial demand and we are in a recession.

This has been 100% accurate for the last 30 years I have been noting it.

Today, the cost of diesel is less than the cost of gasoline.

Never seen it before, I think this is the big one.

I do high end hard core industrial sales as an engineer, the bottom dropped out for us about 6-8 weeks ago.  Another accurate but ominous indicator of bad things in the industrial eccconomy.

 

 

Fri, 08/07/2015 - 02:00 | 6400306 Falling Down
Falling Down's picture

Great observation.

When diesel crashed in late '08, I figured it was an ominous sign.

Thu, 08/06/2015 - 20:14 | 6399499 Everybodys All ...
Everybodys All American's picture

If you place enough central planning communists in the government they just might be right. Case in point Venezuela. There's no recession. It's an out an out collapse.

Thu, 08/06/2015 - 20:19 | 6399525 Bunga Bunga
Bunga Bunga's picture

In other words: bad news, no end of depression.

Thu, 08/06/2015 - 20:21 | 6399528 _SILENCER
_SILENCER's picture

A friend of mine told me today he's about to channel a lot of dough into Tesla stock. He drives a Model S, loves it, it's a completely emotional buy. Seems to think it'll go to the moon when the Model X is delivered and the Model 3 after that. I told him "what about when the financial system takes a shit in the next, hell, couple years and all your paper goes poof?"

 

Thu, 08/06/2015 - 22:08 | 6399848 wendigo
wendigo's picture

What'd he say to that?

Fri, 08/07/2015 - 06:59 | 6400485 Arnold
Arnold's picture

May I refresh your drink / pipe / needle?

Thu, 08/06/2015 - 20:28 | 6399551 Bay Area Guy
Bay Area Guy's picture

Yeah, inflation topping out at 2% a year.  Uh huh.  I believe that.  No.  Really, I do.

Just one of many total bullshit numbers in this "forecast".  I do agree, however, that we won't see a recession in the coming decade.  Nationally, we'll still be in a depression that's made worse by the popping of, in order:

Dot Com Redux

Real Estate Redux

Bond Market

Stock Market

Plus, I have to figure that the U.S. or some other equally lunatic nation will do something incredibly stupid in the Middle East and cause oil prices to shoot through the roof, further screwing up the real economy, not this fairy tale economy that the TBTF are trying to push.

Thu, 08/06/2015 - 20:31 | 6399561 buzzsaw99
buzzsaw99's picture

seeing as they are tbtf they probably won't have a recession. the rest of us are still in a depression.

Thu, 08/06/2015 - 20:35 | 6399575 HYMN
HYMN's picture

"Won't be another recession in ten years" So by "another" they are admittng we are presently in one ? GDP will be closer to 1.5% if truth were told, no one believes their numbers, do they ? Reuters had a thing: "Data supports rate hike in September" No way by any stretch does Data support this. Hell, the FED doesn't really support it ! The strong dollar is already screwing with emerging markets and ours. If the FED were to raise the rate and give the dollar another shot in the arm it will wreck havoc on EMs. What if the EMs refuse to take our shit laying down, what if enough is enough and they say "fuck it" and dump dollars. Kinda like we're going down anyway, so fuck you, we're taking you with us. Data Supports indeed, the data wouldn't support Janets balls if she had any. I see where the IMF and Japan just can't wait for a rate hike, it's such a stellar idea at the moment. Oh, and abolish the FED !

Thu, 08/06/2015 - 20:49 | 6399617 Bay Area Guy
Bay Area Guy's picture

Real GDP is negative today if you use any rational measure of inflation.  The government numbers use the bullshit 1.5% or so for inflation because of so many things they don't include (like food and housing( as well as substitutions (chicken instead of beef, although, based on current trends, they're going to have to subsitute rat meat for chicken pretty soon).  Shadowstats says between 7% and 12%.  Using even the lower of those two numbers, we've been in a depression, we're in a depression and, using BofA's fairyland top numbers, we'll continue to be in a depression for the next ten years.

Thu, 08/06/2015 - 20:38 | 6399581 Incubus
Incubus's picture

This isn't a recession.

 

This isn't a depression.

 

This is a collapse.

At freefall speeds.  You don't realize you're falling until the ground hits you.

 

Thu, 08/06/2015 - 20:52 | 6399622 Puchica
Puchica's picture

"Waiter, I'll have whatever those assholes laughing in the corner are having."

Thu, 08/06/2015 - 20:53 | 6399640 Pumpkin
Pumpkin's picture

They're right.  It will be the beginning of a several decade long depression.

Thu, 08/06/2015 - 21:13 | 6399698 robertocarlos
robertocarlos's picture

They finally saw that Stop Leak commercial and ordered a few dozen cans. The key word is it keeps out "all" the water.

Thu, 08/06/2015 - 21:22 | 6399717 Bitcoin Meiser
Bitcoin Meiser's picture

Recession. If they mention it, that means it's coming.

Thu, 08/06/2015 - 21:31 | 6399742 rsnoble
rsnoble's picture

I can't wait to see Karl Rove's spin on all the mass riots when the economy has been declared to have fully recovered.  And really, why should he give a fuck?  People like him will be paid millions to spew lies.  We really need this all to crash, much sooner than later. 

Fri, 08/07/2015 - 00:25 | 6400168 401K of Dooom
401K of Dooom's picture

You think this makes them liars?  You have seen them when before they became Bank of America.  Back when Fleet Bank of Massachusetts existed, whenever someone tried to close out an accout they had with them, Fleet would come up with some kind of unknown fee or regulation to stop them from closing out their account.  At the time when I was listening to the Howie Carr show on AM 680 WRKO to the stories that people had with Fleet in trying to close out their accounts or give up trying, I got the impression that Fleet was so desperate to keep depositors that they were resulting to outright lies to keep customers.  Trust me, do not move to Massachusetts!  That state is a roach motel just like East Germany was.  I was lucky to get out and I now live in a better place. 

Fri, 08/07/2015 - 00:44 | 6400207 JD59
JD59's picture

Bank of America must be drinking the Obama brown piss utopia koolaid. LOLMF!

Fri, 08/07/2015 - 09:23 | 6400304 Albertarocks
Albertarocks's picture

Holy shit.  I can't believe I just read that headline.  BAC stock crashed to $2.45 not long ago and was bailed out.  This prediction is proof positive why that scabby excuse for a bank should have been left to drown back in Feb. 2009 when it needed to...  AND DESERVED TO AS MOTHER NATURE OF ECONOMICS INTENDED.

Fri, 08/07/2015 - 02:13 | 6400316 No More Bubbles
No More Bubbles's picture

How do such criminal fucktards get 7 figure salaries to spew complete FRAUD?  Get the Guillotines ready!

Fri, 08/07/2015 - 09:43 | 6400911 To Hell In A Ha...
To Hell In A Handbasket's picture

Let me interject and play Devils Advocate. Greece is proof economic theory no longer applies. I'm one of the loudest critics of fiscal/monetary policy by the Central Banks on ZH, arguing that data and metrics does not mean shit anymore. I never believed in the ability of the Central Bank to command and control the markets to the extent it has and thought market forces would have applied in several theatres, but it never has. I believed if Greece ever defaulted, it would have triggered X, Y and Z, but it never happened. The debt load of Japan, should have done X, Y and Z to the Japanese economy and Yen, using any of the major economic theory you wish to apply(Keynesian, Austrian Economics, et al) yet it has not happened. How many doom and gloom stories from ZH, basically claiming(LOOK AT THE DATA, ITS GOING TO CRASH-IMPLODE ANYTIME NOW!), has not come to fruition? Myself, plus 95% of the posters on this site and Zero Hedge themselves have been wrong, wrong and WRONG! I have no shame in admitting when I'm wrong. I can't make heads or tails of the data, as what should happen according to economic theory, does not happen in real life. We may all sneer at BOA and their outlandish claim of a recession being years away. I pissed myself laughing also, but the fact remains, the banks are no more or less accurate in the medium term than ZH, as long as they control monetary policy which they do. Why am I so sceptic? I’ve resigned myself to the conclusion it is impossible to apply economic theory as of today, when what we see practiced today in the markets is outright fraud and market manipulation and therefore no economic model has been invented to correctly predict the outcome of such actions.

Fri, 08/07/2015 - 10:15 | 6401027 Jersey_Mountaineer
Jersey_Mountaineer's picture

I guess the same success rate is  expected of "expert" economists ans baseball players.

Fri, 08/07/2015 - 16:14 | 6402352 A is A
A is A's picture

Dammit.... Now I want some black cherry Kool-aid... extra sugar.

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