BofA Global Research Anticipates Economic Growth Surge by 2026
AI Investment Growth and Global Policy Shifts Poised to Drive Market Returns Amid Market Fluctuations
Recent analysis indicates that 2025 was a notably robust year for markets worldwide, prompting significant interest from investors eager to understand the sustainability of this economic momentum. Key trends such as fluctuating fiscal policies, the burgeoning influence of artificial intelligence (AI), and ongoing challenges in various industries are essential to consider as we approach 2026. BofA Global Research has forecasted that volatility may increase as the economic landscape evolves, shaped by the unfolding impacts of AI.
"Despite various uncertainties, we remain optimistic about the direction of the economy and the potential of AI," stated Candace Browning, head of BofA Global Research. "We foresee significant economic growth in both the US and China, and we believe concerns surrounding an AI bubble are exaggerated. AI investment is set to sustain its expansion into 2026."
Key Economic Predictions for 2026
BofA Global Research is making bold predictions regarding the upcoming economic climate, focusing on several critical areas:
- Bullish on US GDP Growth — Senior US Economist Aditya Bhave anticipates a growth rate of 2.4% for the 4th quarter of 2026. Influencing this optimistic outlook are various factors, including initiatives like the One Big Beautiful Bill Act, a rebound in business investment following the restoration of Tax Cuts and Jobs Act benefits, and supportive fiscal policies.
- Sustained AI Investment Growth — The ongoing AI boom has already contributed positively to GDP growth, with experts at BofA expecting this trend to continue. Historical analyses show that the technology sector remains solid, indicating that the market is not in a bubble phase.
- Opportunities in Emerging Markets — According to David Hauner, head of Global Emerging Markets Fixed Income Strategy, a weaker US Dollar, combined with lower interest rates, creates an opportune environment for emerging markets to thrive in 2026.
- Positive Outlook for China — Helen Qiao, chief economist for China, has upped the forecast for China’s GDP growth to 4.7% for 2026, indicating a favorable trajectory driven by recent trade discussions and effective stimulus measures.
- Modest S&P Returns Expected — Savita Subramanian, leading US Equity Strategy, projects a growth of 14% in earnings per share but only a 4-5% increase in the S&P's index, with a target of 7100. This suggests a potential transition from a consumer-driven market to one focused on capital expenditures.
- Potential Decrease in UST Yields — Predictions suggest that 10-year Treasury yields may surprise investors on the downside in 2026, with expectations of two Federal Reserve rate cuts possibly altering market perceptions about bond prices.
- Stable Home Prices with Regional Varieties — Insights from the Securitized Products team indicate that home price appreciation may remain flat in 2026, with regional variations driven largely by Federal Reserve policies.
- Projected Volatility as AI Develops — As the understanding of AI's implications on growth and investment continues to evolve, experts forecast increased market volatility, underscoring the importance of remaining vigilant in investing approaches.
- Private Credit and High-Yield Bonds Analysis — Neha Khoda, head of US Credit Strategy, estimates a decline in total returns for private credit to 5.4% next year, prompting investors to reassess asset class allocations towards higher-yield opportunities.
- Copper Demand and Supply Dynamics — With ongoing constraints in supply juxtaposed against strong demand, metals strategist Michael Widmer projects that copper will experience benefits from favorable market conditions in 2026.
About BofA Global Research
BofA Global Research's franchise maintains a comprehensive analysis framework covering approximately 3,500 stocks and over 1,300 credits worldwide. Their efforts have earned them notable accolades in the industry, including recognition as one of the top global research firms. The commitment to excellence has also been acknowledged in various surveys highlighting their standings in different markets.
About Bank of America
Bank of America, a foremost financial institution, provides an extensive array of banking, investing, and asset management services to individual and corporate clients. Ranked among the leading financial establishments globally, Bank of America stands out for its convenience, catering to nearly 70 million clients through thousands of retail centers and ATMs, along with superior digital banking capabilities.
Stock details: Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.
Frequently Asked Questions
What are BofA's predictions for the US GDP in 2026?
BofA forecasts a GDP growth rate of 2.4% for the US economy in 2026.
How is AI expected to impact the economy in 2026?
AI is anticipated to drive continued investment growth, contributing positively to GDP despite some concerns of a bubble.
What opportunities exist in emerging markets according to BofA?
Weaker US dollar and lower rates are expected to boost performance in emerging markets in 2026.
What is the outlook for China's economy?
China's GDP growth is projected to reach 4.7% in 2026, driven by trade developments and stimulus efforts.
How might housing prices behave in 2026?
Flat home price appreciation is expected in 2026, with potential regional variations influenced by Federal Reserve policy.
