Key highlights:

• We have revised up our expectation for Q4 GDP growth, mainly reflecting the November plunge in goods imports. We now expect growth of 2.7% q/q (annualised).
• However, there are signs of the economy weakening at the end of 2022, with further falls in retail sales and industrial production in December, while business surveys continue to fall.
• The revision to Q4 GDP growth sees our 2023 forecast lift to 0.6% (from 0.2%) but we still expect the US to enter recession in 2023. We also still expect the fed funds target range to peak at 4.75% to 5.00%, with 25 bp increases at each of the February and March meetings.

Find out more in NAB’s US Economic Update (January 2023)