Content area
Full text
PARTICIPANTS I Conf. Board = Conference Board, New York, New York; Fannie Mae = Fannie Mae, Washington, D.C.; GSU - EFC = Georgia State University, Economic Forecasting Center, Atlanta, Georgia; Moody's Economy = Moody's Economy.com, Westchester, Pennsylvania; Mortgage = Mortgage Bankers Association, Washington, D.C.; NAM = National Association of Manufacturers, Washington, D.C.; Perryman Gp = The Perryman Group, Waco, Texas; Royal Bank of Canada, Toronto, Ontario, Canada; S&P = Standard & Poor's, New York, New York; US Chamber = U.S. Chamber of Commerce, Washington, D.C.; Wells Fargo = Wells Fargo Bank, San Francisco, California.
Expectations for the U. S. economy in the second half of 2022 suggest modest growth well into the first half of 2023. Consensus thus expects the nation's GDP growth rate to remain in the neighborhood of 1.65%. The consensus contains differing viewpoints, however. Dr. Ray Perryman of the Perryman Group expects the economy to face significant headwinds, with supply chain woes exacerbated by slowdowns in Chinese production and the Ukraine war weighing heavily on the oil and gas and grain markets. Wells Fargo, on the other hand, expects the economy to maintain a positive trajectory over the next two years with real GDP growth in the vicinity of 2.4% for 2022 as a whole, but to cool to 2.0% in 2023.
Recent increases in the price of crude ($121 per barrel as of this writing), the low unemployment rate (3.6%), expanded money supply during the pandemic, together with supply chain challenges, have raised inflation to a 40-year high (8.6% in May) making goods and services more expensive. At the same time, decreases in the pandemic assistance payments and a resurgence of the Omicron variant are keeping consumers cautious in terms of their spending. All of these factors can be seen as creating an environment of 'modest economic growth.
CONSUMER SPENDING STRONGER THAN EXPECTED & SET TO CONTINUE
Continuous improvement in the employment rate and increases in consumers' personal disposable income have positively affected consumption and subsequently have driven growth in the economy. However, Americans' wealth has taken a hit via stock market declines, despite continued gains in home values. Volatility in the stock market contribute to a reluctance in spending through the 'wealth effect'. Correspondingly, light vehicle sales are forecast to...