Incoming data point to GDP growth returning to positive territory in Q3, albeit the main driver is the volatile net exports component.
The Fed delivered a 75bp rate hike in September, as expected. However, member projections were hawkish and we have revised up our rate expectations – we now see a peak target range of 4.25-4.50% (previously 4.00-4.25%).
We still expect the US to enter recession in 2023. Reflecting tighter policy expectations, we have modestly lowered the GDP growth forecast and in 2023 we expect no growth (was 0.2%), including at least two quarters of negative growth.
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.