US Forecast Update

The Conference Board forecasts that US economic growth will slow over the course of this year and that a shallow recession will occur in late 2022 and early 2023. This outlook is associated with persistent inflation and rising hawkishness by the Federal Reserve. We forecast that 2022 Real GDP growth will come in at 1.7 percent year-over-year and that 2023 growth will slow to 0.5 percent year-over-year.

In light of high inflation readings, US monetary policy is becoming more hawkish. The Fed has signaled that it intends to raise interest rates markedly over the coming months and that the Fed Funds rate will likely end 2022 in “restrictive” territory (above 3 percent) before continuing to rise potentially to 3.75-4.00 percent in 2023. These higher interest rates will curb consumption and business investment growth and impact the labor market as well.

See the latest update on our US Economic Outlook.
See also Economy Watch: US View (July 2022).