The Macro View from B of A Equity Research on May 21

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The US stands out as the only major economy that has neither market-imposed nor self-imposed constraints on fiscal easing.

• This, along with q uicker economic re opening , should lead to
higher near - and medium -term inflation than in other DMs .

• A key feature of tech supply chains is that the US is both
upstream and downstream of China . Despite efforts to
decouple, economic interdependencies will likely continue.

• We have raised our US inflation forecasts : we look for 3.4%
and 2.5% core CPI inflation in 2021 and 2022 (4Q/4Q).

• According to the University of Michigan data , bot h sh ort - and
long -term inflation expecta t ion s have surged in the US.

• However, the Fed will likely continue to argue that the
increases are temporary and require no policy response.

• Using machine learning tools we show that the ongoing
normalization in consumer mobility should support continued
strength in spending and demand for oil.

BofA is forecasting 11% quarter-over-quarter GDP growth for the U.S. in Q2.