Key highlights:

• Reflecting strong January data we have revised up our Q1 GDP growth forecast. That said, we still expect to see a downturn in the US economy this year.
• Authorities moved quickly to stabilise the US banking system following the collapse of Silicon Valley and Signature banks. The potential fall out for bank lending and business/consumer confidence is a negative for the economy.
• Recent data and revisions point to inflation easing more slowly than previously expected.
• Our forecasts still allow for the Fed to hike rates by 25bp at its March meeting (and by the same amount in May) although a pause in March would not be a surprise, particularly if financial markets remain under stress. We expect the Fed will wind back (if not end) QT, or flag its intentions to do so.

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