Bank of America Sees U.S. Economic Strength in Productivity Gains

Bank of America (BofA) remains bullish on the long-term strength of the U.S. economy, citing a sustained rise in labor productivity as a key driver of growth. The bank points to three structural factors fueling this trend:

✅ Business Formation Surge - A 37% increase in business applications since 2019, led by tech startups, reversing the previous "startup deficit."
✅ Deregulation - Reduced regulatory burdens, particularly in financial services, are fostering a more dynamic business environment.
✅ Capital Deepening - The U.S. capital stock is aging, prompting increased investment in infrastructure, reshoring, and data centers.

Investment Trends: Where Is Capital Flowing?

📌 Tech-Led CapEx Expansion

• After years of dominance by tech spending, capital expenditures are broadening across industries.
• Infrastructure upgrades & AI-driven investments are boosting the U.S. economy's productive capacity.

📌 AI's Long-Term Growth Potential

• Despite heavy investments, BofA remains cautious about AI's immediate economic impact.
• The bank sees AI as an "upside risk" rather than a short-term productivity driver.

Investors can track capital investments and sector-specific financial health using Key Metrics (TTM) API to analyze how companies are allocating resources toward growth.

Market Implications: Will Productivity Gains Drive Higher Valuations?

🔹 Stronger Productivity = Higher Earnings Growth - Businesses becoming more efficient could drive higher corporate earnings over the long term.
🔹 Deregulation Boosts Financial Sector - Financial firms may see improved margins as compliance costs decrease.
🔹 Infrastructure & AI Spending Creates Investment Opportunities - Industrial, technology, and financial stocks could benefit from these trends.

While the immediate impact of AI remains uncertain, structural economic strength suggests resilient long-term growth for the U.S. economy.