What recession? Investors surveyed by Bank of America just reported a record jump in economic optimism

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Mario Tama / Getty Images

  • Expectations that global growth will improve in the next year jumped to net 29% of respondents in December, according to Bank of America’s Global Fund Manager Survey released Tuesday.
  • That’s the biggest two-month jump on record, BAML wrote.
  • It’s also a sharp contrast from earlier in the year, when the survey showed intense fear of a global recession.
  • Read more on Business Insider.

Fewer investors are worried that the global economy will fall into a recession next year.

Expectations that global growth will improve in the next 12 months jumped 22 percentage points to net 29% of respondents in December, according to Bank of America’s Global Fund Manager Survey released Tuesday.

That’s the biggest two-month jump on record according to the survey, which in early December questioned 199 participants with a combined $627 billion in assets under management.

“In the last two months FMS investors have priced out recession risks,” wrote Bank of America analysts led by Michael Hartnett.

Global growth expectations have jumped a record 66 percentage points while recession fears have fallen 33 percentage points in the same timeframe, the survey showed. And, net 68% say that it’s unlikely a recession will hit in 2020, the largest two-month drop since May 2009, according to the survey.

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BofA Global Fund Manager Survey

The pivot to a positive outlook began in November, when global growth optimism finally pushed into positive territory, jumping to 6% from -37%, the biggest jump in 20 years.

It’s a sharp contrast from earlier in the year, when the survey showed intense fear of a global recession.

In June, the survey was the most bearish since the Global Financial Crisis, according to Hartnett, as 50% of investors surveyed said they expected global growth to weaken in the next year.

The following month’s survey showed that investors were feeling increasingly worried about fiscal policy in the US and its potential ramifications in the economy. In August, that led to recession fears surging as overall recession probability jumped to the highest reading since 2011.

The bearish sentiment continued. The survey showed that 38% of fund managers expected a recession in the next year in September, the highest net percentage since 2009 in the midst of the financial crisis. In October, fund managers again worried that US fiscal policy was too tight, and a record 90% said that they thought the country was in a “late-cycle” environment.