Stagflation Risk Eases in May, According to Bank of America Survey

Stagflation Risk Eases in May, According to Bank of America Survey

The risk of stagflation — a scenario of stagnant growth coupled with inflation — eased somewhat in May, according to the latest global fund manager survey conducted by Bank of America. The survey reveals that 81% of the investors surveyed are forecasting stagflation in the coming 12 months. This is a notable drop from April’s survey, where 90% of investors expected stagflation, marking the highest level since November 2022.

Along with the decrease in stagflation expectations, the survey also found that 9% of investors anticipate a period of stagnation, where growth and inflation are both below their long-term trends. Additionally, 3% of respondents predict a "boom" scenario, where both growth and inflation exceed trend expectations. Another 3% foresee a "goldilocks" scenario, characterized by robust growth and low inflation.

The findings suggest that investor sentiment around the global economy has become slightly more optimistic, but concerns about inflation and growth still persist. Despite the easing of stagflation fears, many investors continue to remain cautious about the future trajectory of the global economy.