According to new note from BofA Research analysts, the next phase for the U.S. economy and equities might not be a routine recovery, but an outright boom.

“Today a confluence of factors argue that the key tail risk that may not be priced in is not just a cyclical recovery, but a boom,” they said.

5 reasons for a boom

BofA analysts cited five pillars supporting this more bullish case.

First is political will, arguing that with U.S. midterm elections a few quarters away, policymakers have strong incentive for near-term, pro-growth initiatives.

Second is Washington’s “One Big Beautiful Bill Act” (OBBBA) targeting domestic manufacturing.

Third is the massive overseas jolt gathering, with Germany recently enacting the largest stimulus package in EU history, while global reflationary forces are building elsewhere.

Fourth, BofA sees a broad expansion of capital expenditures, with hyperscalers such as Amazon, Meta, Microsoft, and Alphabet set for nearly $700 billion in capital expenditures between 2025 and 2026. In addition, more non-U.S. companies plan to expand manufacturing capacity in the U.S., while municipalities are focused on updating aging infrastructure.

Fifth, BofA cited its proprietary “Regime Indicator,” a blend of macro signals including corporate revisions to earnings per share, GDP forecasts, and other emerging signals. It’s on the verge of flipping from a “Downturn” to a “Recovery”—a change that historically presages a rally in value stocks.

The dominant narrative in this indicator remains conservative, according to the BofA team, led by Savita Subramanian. In June, 70% of fund managers still predicted stagflation, with only 10% foreseeing a “boom” of above-trend growth and inflation. Yet, BofA argues, the catalyst for an upside breakout is real and imminent. If the Regime Indicator does indeed flip to “Recovery” in early August, historical precedent suggests a rapid rotation is likely.

So how healthy are these five factors actually looking?

Will there be enough spending?

Top economies have already pledged massive stimulus. In March, China unveiled plans to issue 1.3 trillion yuan ($179 billion) in special treasury bonds this year, plus 4.4 trillion yuan of local government special-purpose bonds.

Meanwhile, much of the EU’s stimulus still flowing from the earlier NextGenerationEU package is worth up to €806.9 billion (about $880 billion) through 2026. Major European economies have supplemented this with additional investments and, in some cases, targeted fiscal expansion.

Japan, South Korea, Canada, and Australia have adopted smaller-scale but still significant fiscal measures in 2025 to address sector-specific slowdowns, energy security, and household purchasing power. Most are focusing on targeted transfers, green investments, and industrial support.

Meanwhile, American companies have announced billions in new U.S. manufacturing, infrastructure, and technology investments since Trump took office, but these initiatives were announced before passage of the OBBBA.

Many investments are phased and slated for completion over the next decade, and it’s unclear how much can come online soon enough to play a role in the boom that BofA Research is projecting. Some of them, such as OpenAI’s $500 billion Stargate project, are reportedly struggling to raise funding to match the big numbers initially announced.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.