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Can strong US GDP growth be sustained into 2022?

While the US saw stronger than expected GDP growth in Q4 2021, consumer spending could slow in the first quarter of 2022.

27 January 2022

US GDP growth in the last quarter of 2021 was much stronger than expected coming in at 6.9% against forecast of 5.3% growth. That stronger than expected boost into the year-end meant that overall growth in the US came in at 5.7% for the full year after declining 3.4% in 2020 when the pandemic started. Some things to bear in mind here though - with inflation running so hot, there is evidence that consumers are slowing their spending habits, despite companies rebuilding inventories (contributing a standout 4.9% of the overall 6.9% growth). So, with the Omicron surge affecting consumer behaviour much more this first quarter, it’s likely that Q1 2022 growth won’t be as impressive as a lot of that rebuilt stock sits idly by. Unfortunately, this strong growth, however it is composed, will only spur the Fed to act more aggressively than the markets had previously discounted.

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Charles Hepworth

Investment Director
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