US Economic Update – May 2022

Revising down US growth forecasts.

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Key highlights:

  • GDP still looks set for a rebound in Q2 2022, but beyond that the outlook has weakened.
  • We have revised down our GDP forecasts to allow for the fall-out from lockdowns in China and a greater than expected tightening in financial conditions (falling equity prices and dollar appreciation).
  • We have brought forward our expected timing of fed fund rate hikes – we now expect the Fed to hike by 50bp not only in June but also in July.
  • We expect the Fed will move more slowly towards the end of the year; as a result, our forecast of the peak fed funds rate (2.50-2.75% in Q1 2023) is unchanged.

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