You’re heading into 2026 with one of the biggest banks on Wall Street telling you the economy can run stronger than most people expect. Bank of America’s Global Research team used its December 2025 outlook to stake out a clearly bullish position on next year’s growth, especially in the United States.
In that report, the bank says it forecasts stronger‑than‑expected economic growth in 2026, explicitly calling its stance more optimistic than consensus. Senior U.S. economist Aditya Bhave pins U.S. real GDP growth at 2.4% on a fourth‑quarter‑over‑fourth‑quarter basis, versus a broader forecast pack clustered closer to the low‑2% range.
Candace Browning, head of BofA Global Research, summed up the tone, saying the team “remains bullish on the economy and AI,” and is “optimistic on the two most influential economies, expecting above‑consensus GDP growth for the U.S. and China.” That message quickly jumped from press releases into social media, with WatcherGuru posting on X that “Bank of America projects ‘strong’ economic growth in 2026,” giving retail traders a simple headline to latch onto.
To understand what this means for your money, you have to look past the adjective and into the numbers. BofA’s 2.4% U.S. growth forecast may sound modest, but relative to fears of a stall‑out or recession, it’s a vote of confidence that the expansion still has legs.
Bhave’s team doesn’t stop at 2026. The outlook keeps U.S. growth at roughly 2.2% in 2027, signaling that the bank sees a long, grinding expansion rather than a short‑lived burst. On the global side, BofA lifts its China forecast to about 4.7% GDP growth in 2026 and 4.5% in 2027, citing better‑than‑expected trade and support from domestic policy as key reasons.
Those macro assumptions feed directly into how the bank thinks markets behave. In U.S. equities, its strategists project roughly 14% earnings‑per‑share growth for S&P 500 companies in 2026 but only 4–5% upside in the index level, targeting a year‑end S&P 500 around 7,100. That combination (strong earnings, modest index gains) suggests a world where the economy is doing its job, but valuations are already rich enough that you can’t count on big multiple expansion to juice returns.
MoreEconomic Analysis:
On interest rates, BofA expects the Federal Reserve to deliver two cuts in 2026 and sees the 10‑year Treasury yield ending the year in a 4–4.25% band, with some risk yields drift lower if growth softens or investors seek safety. For you, that points to slightly easier borrowing conditions than in 2024–2025, but not a return to the ultra‑low‑rate era that fueled earlier housing and stock booms.
Bank of America doesn’t claim this “stronger than expected” growth shows up out of nowhere. Instead, its economists as reported by Yahoo Finance highlight a set of policy and investment tailwinds they believe will offset headwinds from higher prices and a cooling job market.
According to the bank, five forces are doing most of the work behind the scenes.
Fiscal and tax policy: BofA estimates the so‑called “One Big Beautiful Bill Act” could add roughly 0.3–0.4 percentage points to fiscal‑year 2026 GDP by propping up household spending and encouraging business investment, while restored Tax Cuts and Jobs Act benefits support capex.
AI‑driven capex: The bank argues that AI investment has already contributed to growth and will “continue to grow at a solid pace in 2026,” from data centers to chips to software, and says worries about an immediate AI bubble are “overstated.”
Layered on top of that is the lagged impact of lower rates, as prior and expected Fed cuts flow through mortgage markets, corporate borrowing, and risk appetite. BofA also points to somewhat friendlier trade conditions and lower energy prices as global supports, especially for emerging markets and import‑heavy economies.
For you, the key is that this is not a consumer free‑for‑all story. Instead, it’s a picture of an economy pulled forward by business and government spending, with households benefiting indirectly through jobs and incomes, but still operating under tighter budgets than before the pandemic.
“Strong” economic growth doesn’t mean everything suddenly feels easy on Main Street. BofA’s own language is clear that the labor market is softening from red‑hot levels, just not collapsing the way it typically does before a recession.
The bank expects monthly job creation to slow significantly, averaging around 50,000 per month in 2026, and sees the unemployment rate grinding into the mid‑4% range. That’s still historically decent, but it means wage growth is unlikely to repeat the outsized jumps of 2021–2022, and job‑hopping for huge pay bumps gets harder.
On prices, BofA had to lift its inflation forecasts when it raised its growth outlook. Its economists now see core PCE inflation sticking above the Fed’s 2% target at various points in 2026, thanks to tariffs, service‑sector stickiness, and housing dynamics, even as goods inflation cools.
For your wallet, that mix looks like this: your job is more likely to still be there than in a recession scenario, but your costs (services, rent, and essentials) stay elevated enough that you cannot relax your budget. BofA’s private‑bank research notes that resilient spending from higher‑income households and retiring baby boomers has helped carry the expansion, and it expects that pattern to keep supporting growth into 2026.
If you watch markets on social media, it’s easy to see why this particular forecast caught fire. 2025 has been packed with conflicting narratives: warnings about stagflation and hard landings on one side, and talk of “immaculate” soft landings on the other. A big bank planting a flag on the bullish side gives you a different anchor for 2026 expectations.
Coverage of BofA’s global fund manager surveys shows professional investors leaning in the same direction, with money managers turning “ultra‑bullish” on growth and adding to stocks late in 2025. At the same time, BofA’s own 2026 market outlook stresses that this is more likely a year of solid but choppy progress than a straight‑line melt‑up, with AI, infrastructure, and select global plays offering opportunity alongside pockets of froth.
For you as a saver or retail investor, the signal beneath the noise is straightforward. A credible institution is telling you the base case for 2026 is not recession, but ongoing expansion powered by investment and policy, with inflation and volatility still in the picture. That backdrop tends to reward consistent contributions to retirement accounts, diversified portfolios, and a focus on quality over quick speculation more than it rewards jumping in and out of the market on every scary headline.
Related: Bank of America resets Micron stock price target, rating
This story was originally published by TheStreet on Dec 23, 2025, where it first appeared in the Markets section. Add TheStreet as a Preferred Source by clicking here.
