United States: The H1 contraction will be followed by a protracted period of sub-par growth, but the ongoing deceleration is so far not yet due to Fed tightening; cracks are appearing in an apparently strong labour market, and we expect the lack of productivity to cause a labour market correction.
This raises the recession risk for mid-2023, when monetary policy action is expected to take more effect. Easing, but still high, inflation is ahead. Bottlenecks and price pressures are easing, but are staying high. This should push down goods inflation, but lower rent inflation is a 2023 story, meaning inflation will stay significantly above target for several quarters still.
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