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U.S. economic growth forecast cut

U.S. economic growth forecast cut

Washington, May 22 (Prensa Latina) The United States today shows signs that are leading to a slowdown in economic growth and an increase in inflation, says a report by the Bank of America banking-financial corporation.
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According to analysts at that company, problems in supply chains and a tight labor market are putting pressure on prices to rise, which is why they cut their growth outlook for the economy in 2022 and 2023.

Based on this, the gross domestic product could grow 2.6 percent this year, one percentage point below the projections shared at the beginning of this year.

In a meeting with its main clients, the economists led by Ethan Harris also lowered the growth estimate for 2023 to 1.5 percent, from 1.8 percent previously.

Instead, they maintained their outlook for a rise in the price index of basic personal consumption expenses to 4 percent this year, but raised their forecast for 2023 to 3 percent from 2.6 percent.

From his perspective, severe overheating in the US labor market is putting upward pressure on wages, which could require the Federal Reserve to raise the unemployment rate in 2023 and 2024.

“We are increasingly pessimistic about the coming year, as key inflation indicators continue to show signs of a larger persistent component and severe overheating in the labor market remains,” the experts noted.

In that context, the Federal Reserve raised interest rates by half a point this month and signaled that it will carry out similar rate hikes in June and July.

Central bank Chairman Jerome Powell said this week he will continue to raise rates until it is “clear and convincing” that inflation is slowing, warning that may require an increase in the unemployment rate.

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