The Bank of America US Economist Michael Gapen has revised higher its outlook for economic activity this year and next, no longer expecting the economy to fall into a mild recession in 2024.

The Bank of America expects the Fed’s rate hike to conclude in a soft landing, where growth falls below trend in 2024 but remains positive.

This move comes amid increased optimism about the US economy.

Last week, Fed Chair Jerome Powell said central bank staff no longer expects a 2023 recession.

Goldman Sachs reduced its 12-month recession probabilities to 20% from 25%, and Goldman’s chief economist Jan Hatzius predicted “unspectacular growth” for the US economy.

Caterpillar reported better-than-expected business activity.

Current-quarter forward-looking indicators are also rising, with the Atlanta Fed’s GPDNow forecaster expecting third-quarter economic growth to rise to 3.9%, the highest since the fourth quarter of 2021.

The Fed’s 2% inflation aim is far off, and BofA expects a September Fed rate hike and a slower-than-expected lowering cycle commencing in June 2024.