Five reasons why the US economy may be in trouble – Natixis
|US growth forecasts for 2022 are already not very strong. But analysts at Natixis see several reasons why indeed we should be quite pessimistic about US growth in 2022.
Mechanisms that may hamper US growth in 2022
“Even though it remains high, the US structural fiscal deficit will be much lower in 2022 than in 202, which will contract demand. Even if the deficit reduction comes from the end of spending related to the COVID-19 crisis, it has a contractionary effect on the economy when it goes beyond what is provided by growth.”
“Wage earners’ purchasing power declines with the rise in inflation, which may weaken consumption.”
“The contribution of foreign trade to growth will remain negative, which is shown by the deterioration in foreign trade, caused by the surge in imports due to strong consumption of goods.”
“Both the participation rate and the employment rate have fallen, which may weaken production unless these declines are offset by higher productivity gains.”
“Consumers remain cautious, as shown by the still high level of the household savings rate; there is therefore no consumption of accumulated savings.”
“This prospect of modest growth in 2022 in the US will not push the Federal Reserve to be very aggressive in exiting quantitative easing.”
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