The economy resumed growth in Q3, although this was in large part due to an unsustainably large net export contribution.
Growth in domestic final demand was weak in Q3 and October business surveys point to a weakening economy.
We have made small upwards revisions to our GDP growth forecasts. We now expect growth of 1.9% (was 1.8%) in 2022, 0.1% in 2023 (was 0.0%) and 1.1% in 2024 (unchanged). We still expect the US to go into a mild recession in 2023.
Following the Fed’s meeting this week, we now expect a higher peak fed funds rate (5.00%, up from 4.50% previously) to be reached in Q1 2023.
The NAB Consumer Stress Index rose in the March quarter. High living costs continue to drive spending behaviours, with shoppers looking for ways to save money.