Bank of America analysts are debating whether the U.S. economy is experiencing stagflation or reflation amid supply and demand shocks.
Resilient consumer spending and strong corporate earnings point to reflation. However, fading fiscal support means the real test lies ahead.
April inflation data exceeded expectations. Core CPI rose 0.4% month-over-month, driven by shelter inflation up 0.6%.
Bank of America estimates core PCE increased 0.28% month-over-month and 3.3% year-over-year in April.
Retail sales remained resilient, with the control group up 0.5% month-over-month.
