Key highlights:

• GDP again declined in Q2. While the fall was smaller than in Q1, the poor result cannot be so easily dismissed by reference to trade and inventory distortions.
• While we (tentatively) expect some growth over the rest of 2022, we see GDP declining again in H1 2023 as the full impact of the Fed’s rate hikes come through.
• With unemployment rising, there will be no debate about whether this constitutes a recession.
• With inflation still high, we still see the Fed lifting rates further although the pace should slow from here.
• We expect the fed funds rate to peak at 3.25-3.5% by year-end.

Find out more in NAB’s US update (July 2022)