The COVID-19 shock led to a sharp but short-lived downturn, when the US economy staged an epic recovery. In fact, following a GDP collapse of more than 31 percent annualized in Q2 2020, the US economy rebounded strongly, printing robust annualized growth rates over the subsequent quarters to Q4 last year. Today, the US economy is in the middle of another turning point.
Until recently, consensus forecasts were pointing to another year of extraordinary US growth in 2022. However, significant headwinds emerged, darkening the outlook, including persistent and higher than expected inflation, a rapid monetary policy tightening cycle, disrupted commodity markets, continuous supply-side bottlenecks, and the Russo-Ukrainian conflict. Thus, projections for US growth has been revised downwards in recent weeks. The International Monetary Fund (IMF), for example, has stripped 120 basis points (bps) from their projections for US growth this…
