U.S. GDP has returned to pre-Covid-19 pandemic levels after only one year, driven by strong growth in demand for goods consumption and home sales. That said, goods consumption has begun to decline from mid-2021, lagging slightly behind home sales, which peaked earlier. We expect a slowdown in goods consumption to ease the global supply-demand imbalance in the manufacturing sector and apply friction to stem price increases in the goods market.
The growth rate of the U.S. economy is slowing moderately as the driver of growth shifts from goods consumption to services consumption. GDP growth is expected to slow in 2022 as consumption of some services is unlikely to return to its pre-COVID-19 trend as quickly. In addition to moderating rise in prices of goods, the slowdown in GDP growth will be another factor restraining inflationary pressure. In this article, we explore some of the key implications of this for investors and the economy as a whole.
Written by Naoki Murakami, Senior Economist, Asset Management One Co., Ltd.
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