US Macroeconomic Update – Inflation, Rate & Recessionary Outlook

• With 2022 GDP growth reported at just under 1%, the former Wells Fargo executive expects 1% growth in 2024, followed by 1.8% in 2025 and 2026.
• Although labour force participation has increased, this is still below pre-pandemic levels. Expected increases in credit card delinquencies will likely fuel the return to work.
• So far, inflation has been more persistent than most expected over 2023. The expert attributed that stickiness to the fact many businesses are “trying to make up for time with respect to pricing power”. In the goods sector there is a “lagged impact of the rise in commodity prices over the last 2-3 years since 2020”.

“One is this challenge that a lot of businesses are trying to make up for time with respect to pricing power. Certainly, what we’ve seen in the goods sector is a lagged impact of the rise in commodity prices over the last 2-3 years since 2020.” Former executive at Wells Fargo

• The expert anticipates inflation will be above the Fed’s target throughout this year, “into 2024 and probably into 2025.”

• As BRIC countries continue to initiate trade agreements in currencies other than the US dollar, highlighting dedollarisation, the specialist expects to continue seeing downward pressure on the value of the dollar over time. 
• Despite deteriorating outlooks for the US economy, the specialist said the healthcare, technology and communications sectors are demonstrating longer-term resiliency – characterised by innovation and global competitiveness. Maturing commercial real estate debt, however, should remain the highest concern, according to the expert.

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