US Economic Update – May 2021

Q2 growth still looking strong; April inflation surprise.

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Key highlights:

  • April activity data have been mixed, but still point to very strong growth in Q2 GDP.
  • There was a major upside surprise to inflation in April. While this largely reflects some temporary factors that should wane over coming months, how long current elevated price pressures persist is a major uncertainty.
  • We still expect tapering of asset purchases to begin in Q1 2022, with the Fed signalling this towards the end of this year.
  • We also expect the fed funds rate to remain unchanged through to end 2023, but note that this call is line ball, with a risk of rate hikes in 2023.

 Find out more in NAB’s US Economic update May 2021