Image : Nik Shuliahin ( Unsplash ).
MADE IN THE USA
We highlight economic and manufacturing trends and forecasts for the United States .
Image : ( Unsplash ).
“
The U . S . economy has staged a strong recovery from the COVID-19
“ Historic supply chain challenges and inflationary shock . The positive effects of
pressures , along with unprecedented policy stimulus , increasing energy costs , combined with the advantages of a are impacting production highly flexible economy , have been in the U . S .” clear . Just over two years after the
COVID-19 shock , the unemployment rate and other measures of labour force under-utilisation have returned to end-2019 levels and output is close to its pre-pandemic trend ,” said the International Monetary Fund ( IMF ) on 12 July 2022 , after its Article IV consultation with the U . S .
“ Rapid wage increases for lower income workers have reduced income polarisation and poverty fell in 2020 . On net , 8.5 million jobs have been created since the end of 2020 . In addition , the swift policy response was able to maintain the smooth functioning of U . S . financial markets and prevent the surge of bankruptcies that many had feared ,” it added .
However , the rapid recovery of demand and associated depletion of slack , rising energy prices and ongoing global supply disruptions have led to a significant acceleration in inflation . Wage and price pressures are broad-based and have spread quickly across the economy .
An eye on the economy
The International Monetary Fund ’ s annual review of the U . S . economy focuses on the policies needed to return inflation to the Fed ’ s mediumterm target . Most workers ’ wages have failed to keep up with inflation , eroding the purchasing power of households and causing significant hardship . Although increases in gasoline and food prices have been affected by global events , the prices of a broader range of items have also risen strongly , including housing and transportation . If left unchecked , it said , these price increases could become long-lasting .
The cost of borrowing has significantly increased . At the same time , the government is reining in spending , as a range of pandemic-era support programmes are expiring . The IMF expects these policy actions to slow the growth in consumer spending to around zero by early next year , easing the strain on supply chains .
“ At the same time , higher mortgage rates will reduce housing prices , which have grown strongly during the pandemic . Finally , slowing demand will increase unemployment to around five per cent by the end of 2023 , which should decrease wages . All in all , we expect core PCE inflation to fall back towards two per cent by late 2023 , and economic activity to slow from 3.5 per cent in the first quarter of this year to 0.6 per cent by the end of 2023 ,” said the IMF .
U . S . economic developments will continue to be impacted by global factors such as the Russian war with Ukraine , the ongoing pandemic