Many on Wall Street expected a recession as 2023 got underway. That didn't happen, with the economy remaining fairly strong right through the year. Now everyone is wondering if the Federal Reserve managed a "soft landing" of the economy through its rapid boosting of interest rates. That remains to be seen.

Bank of America's (BAC -0.21%) recently released fourth-quarter update highlights this dichotomy between expectations and what is going on today. Let me explain.

Bank of America is upbeat and justifiably so

Bank of America CEO Brian Moynihan summed up 2023 during the bank's fourth-quarter earnings call earlier this month:

Our team at Bank of America delivered strong profits for shareholders across a challenging year, navigating a slowing economy, geopolitical tensions, bank failures, and the impact of a rate hike of historic speed. We began the year with a portentous aura as economists predicted a mild recession within the year. Instead, 2023 showcased economic resilience led by U.S. consumers despite higher interest rates. We ended 2023 with economists projecting the Fed has successfully steered the U.S. economy to a soft landing.

Despite the headwinds, Bank of America was able to increase earnings in 2023 by 7%. All in, things sound pretty good as the bank enters 2024.

However, Bank of America management also highlighted some less compelling trends that investors might want to consider. For example, the bank's data shows that consumer spending growth fell dramatically (it was cut roughly in half) from the start of 2023 to the end of the year. And while less affluent customers still maintain solid balances, their savings are slowly being whittled away while more affluent customers are pulling assets from bank accounts in the search for higher yields.

But here's a really interesting story from the earnings call. Bank of America highlighted that unemployment is around 3.7% but that its base case assumes a 5% rate by the end of 2024. That would suggest a materially weaker economy. And, notably, the company's credit card losses increased as they "normalize" from an unusually low level. Credit card losses have to get back to normal before they can get to a high level. The negative trend is probably more important than the actual level.

Bank of America is one of many

When you look at Bank of America's comments, the story is, perhaps, a little disheartening. Things are fine now, but the trends aren't so great and by the end of 2024, things could look a lot worse. This isn't the only company painting a somewhat troubling picture of the economy.

For example, Burlington Stores recently told investors that it was able to add some well-known brands to its retail offerings that sell at higher prices. Burlington is an off-price retailer. So that suggests that better-off customers might be trading down to off-price shopping, which is not something the customers would do if they were confident about the future. Dollar Tree was even more specific, explaining that much of its customer growth lately was driven by customers with incomes of more than $125,000 a year.

There are other examples as well. Conagra Brands has been discussing thrifty shifts in consumer buying habits that have lingered longer than expected. Essentially, in order to afford some things, consumers are pulling back in other areas. Campbell Soup management noted that buying behavior around Thanksgiving suggests customers are trying to save money, by waiting to buy their holiday meal items until they are on sale. And General Mills lowered its full-year fiscal 2024 organic growth guidance from between 3% and 4% to between flat and down 1% at the midyear mark. The reason: a slower-than-expected consumer recovery.

The consumer might be weaker than you think

Recent gross domestic product (GDP) growth numbers were fairly strong. That's good news, for sure, but there are clear indications on the ground that consumers aren't in as great a shape as the numbers might lead you to believe. And if that is the case, there could be more risk in the market than the indexes trading near all-time highs might suggest.