Bank of America drops stunning take on the economy

The U.S. economy might be stronger than it feels at this point.

According to Seeking Alpha reporting, Bank of America strategist Michael Hartnett argues that the country is caught in a nominal “boom loop.”

At the same time, he predicts U.S. GDP will climb nearly 75% from the pandemic low by 2027.

That’s a powerful move, but it comes with a caveat.

The “boom” isn’t what you might typically expect, with factories ramping up output, wages rising, and consumers flooding in.

Instead, this is a story about the economy getting much larger in dollar terms, as government spending, prices, and corporate sales are all rising in tandem.

Nominal growth makes things look a lot better than they actually are.

For instance, companies end up posting bigger sales figures and stocks can find support, while certain pockets of the economy (chips, commodities, consumer-linked names) benefit from a hotter economy. 

Nevertheless, the boom doesn’t last forever without pressure building somewhere else.

For BofA, the pressure points lie in the bond market. 

If long-term yields continue rising, those forces fueling growth may create problems for equities, consumers, and Washington. 

In a recent piece, Morgan Stanley economists also point to a softer economic reality.

The major bank says that tax refunds, Q1-related quirks, and apparently flashy headline GDP figures mask a more brutal reality from elevated gas prices, tariffs, and sluggish consumption levels. 

Wall Street GDP targets for the U.S. economy in 2026

• Goldman Sachs expects U.S. GDP growth of 2.5% in the fourth quarter.
• J.P. Morgan expects real GDP growth of 2.0% by the fourth quarter.
• Morgan Stanley maintains a 2026 U.S. GDP forecast of 2.2%.
• CBO forecasts U.S. real GDP growth of 2.2% in 2026.
• S&P Global Ratings forecasts U.S. GDP growth of 2.2% in 2026.
• The Conference Board now sees U.S. GDP growth in 2026 at 1.6%.

Why BofA says this boom has a breaking point

BofA’s startling take on the economy is that, instead of the productivity boom that’s being touted of late, what we’re really seeing is more of a giant policy-and-price engine.

For perspective, government spending levels are expected to jump 60% from 2020 levels, and another 15% next year.

That means a ton of money is flowing through the economy, ‘supporting’ jobs, corporate sales, and infrastructure demand, among other things. That, in turn, supports healthier revenue figures, as sales are measured in dollars.

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That’s also why the stock market can continue paying dividends to investors, while the average consumer feels squeezed. 

Hartnett also believes investors need to watch the bond market a lot more closely than the jobs market.

If the 30-year Treasury yield stays near, but below, 5%, the “boom loop” will continue feeding risk assets. 

However, if yields decisively break above that level, we will see a sizeable increase in borrowing costs as valuations get hammered, and Washington’s debt burden becomes an even bigger problem.

For context, the U.S. national debt stood at an eyebrow-raising $38.97 trillion as of April 30, 2026, according to the U.S. Treasury’s Debt to the Penny dataset. 

Investor behavior backs up the tension. 

Stocks saw a mammoth $23 billion in inflows, while bonds added $19.9 billion, marking the 53rd consecutive week of inflows, indicating investors are still buying both growth and protection.

U.S. GDP growth shows a post-Covid reset

The data below underscore the U.S. economy progressing from a Covid-driven slowdown to a sharp snapback in 2021, followed by a far more moderate pattern of expansion in the years after.

That said, here are the latest annualized real GDP growth numbers.

• 2020: U.S. real GDP shrunk 2.1%.
• 2021: U.S. real GDP expanded 6.2%.
• 2022: U.S. real GDP grew 2.5%.
• 2023: U.S. real GDP grew 2.9%.
• 2024: U.S. real GDP grew 2.8%.
• 2025: U.S. real GDP grew 2.1%.
   Source: U.S. Bureau of Economic Analysis (BEA)

Hartnett’s view has turned hotter, but less comfortable

Hartnett’s economy call has gone through an evolution of sorts.

Close to eight months ago, the warning was much more valuation-driven, as the S&P 500’s price-to-book ratio jumped to 5.3, above the dot-com peak, which could only be justified if it was different this time around.

Near December, the view was more about a “run-it-hot” 2026 setup, built on robust growth, fiscal support, and stickier inflation, with commodities being the best expression of that trade.

Now, it’s more about defining the limit of the “boom.”

The latest points to GDP jumping nearly 75% from the 2020 low to 2027, but the 30-year Treasury yield around 5% is the danger line.

Related: Bank of America revamps Amazon stock target after earnings