The US economy contracted by 0.4 percent in the first quarter of 2022 compared with the previous quarter (annualized 1.4 percent). However, this was mainly due to the fact that exports declined significantly as a result of the low momentum of the global economy. Public sector consumption was also down. In addition, companies were somewhat more reluctant to build up inventories than in the final quarter of 2021, when they had replenished their stocks exceptionally strongly. Encouragingly, however, both private consumption and investment increased at solid rates.
Positive growth rates can be expected again in the further course of the year. However, the US economy will not grow strongly. The headwinds are too strong: Inflation, war in Ukraine and lockdowns in China are weighing on further development. In addition, monetary policy is becoming more restrictive. In terms of inflation, I expect a somewhat more pronounced slowdown than in other forecasts. However, inflation will remain elevated. The U.S. Federal Reserve will continue to raise interest rates and also start to shrink its balance sheet.
For 2022 as a whole, I expect economic growth of only 2.0 percent followed by 1.8 percent in 2023. Inflation will remain high this year with an annual average of 6.8 percent. I also expect inflation of 2.6 percent in 2023.
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