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The US Economy Is About to Hit The Wall This 2022

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Close-up of thoughtful male professional being worried about poor business outlook | The US Economy Is About to Hit The Wall This 2022 | featured

Americans who expect the US economy to continue its roaring ways last year should think again. The factors that help the US post its fastest economic growth rate for nearly 40 years are gone.

RELATED: Fed Chair Warns Of ‘Prolonged Recession’

2021 Was a Miracle Year for the US Economy

US dollar banknotes money on chart graph spreadsheet paper with USA America Flag | 2021 Was a Miracle Year for the US Economy | featured

2021 proved a great year for the US economy. However, the successful 5.7% growth rate it posted got help from a few factors. First, American households received a windfall in the form of economic stimulus.

This gave them unprecedented spending power for the next few months. The last batch of stimulus aid came in 2021. Even as stimulus money evaporated, many federal aid programs remained active. 

The second factor was a massive inventory rebuild that spurred US manufacturers to produce record outputs. In addition, the country’s near zero interest rate levels makes borrowing less burdensome. All these combined to fuel the US economy into posting its record growth rates. 

This Year, It’s Different

In 2022, almost everything is in reverse. Little to no growth signs are showing. The effects of the late Omicron surge, plus the withering of fiscal stimulus suggest little growth.

As a result, many Wall Street economists are hastily pulling down their Gross Domestic Product forecasts. At the same time, the US Federal Reserve is slowly pivoting its policies from dovish to hawkish. 

From easy monetary policies, near zero interest rates, and massive bond purchase sprees, the Fed is shifting gears. It now wants to raise interest rates and tighten its monetary supply.  All in the hope of bringing down record inflation levels set last year. 

US Economy Will Post Zero or Near Zero Growth In the First Quarter

As a result, optimism about US economic growth is down across the board. The Atlanta Fed’s GDPNow gauge expects a first-quarter GDP gain of just 0.1%.

Meanwhile, Goldman Sachs reduced its outlook from 2% to 0.5%. The bank also slashed its full-year expectation to 3.2%, well below the 3.8% consensus.

Likewise, Bank of America also cut its expectations from 4% to 1%. From a 4% full-year forecast, it went down to 3.6%.

For Bank of America global economics research head Ethan Harris, there are four reasons. They are omicron, the retreat in inventory build, less fiscal support, and a tighter Fed as well.

According to Goldman economist Ronnie Walker, don’t expect too much action this year. Growth will likely slow abruptly in 2022 as fiscal support disappears.

In the near term, the spread of COVID will begin to affect services spending. It will also extend supply chain issues. “Q1 growth is likely to be particularly soft because the fiscal drag will be accompanied by a hit from Omicron.”

Uncertain Paths Ahead

For this year, the US economy is off to a rocky start. Tuesday’s ISM Manufacturing survey showed that the pace of new orders, despite staying high, is now slowing substantially.

“Inventories are roughly back to where they should be,” said Mark Zandi, chief economist at Moody’s Analytics. “Then you’ve got growing headwinds from fiscal and monetary policy. So, yeah, growth starting the year will be very soft.”

Watch the Steven Van Metre video reporting that the US is on the Brink of a Recession:

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What do you think of the apparent slowdown of the US economy? Was this something that’s fully preventable given the correct course of action?

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5 Comments

5 Comments

  • Terry says:

    The powers to be want more of our $ to front the out of control agenda of Democrats. If the government needs more or spend less here is something no one ever talks about.
    All $ we send to other countries might be warranted in some way but how about reducing the amount as follows;
    Notify each recipient of our hard earn money that the funds will be reduced gradually.
    Year 1 by 5 %
    And for the next 10 years 5% a year. It will give each country time to react to be somewhat self supportive. That will be enough cash to cut the out of control deficit.

    I’ve sent this to several senators with NO response. Guess ignoring is better than addressing

  • Linda says:

    Impeach Biden ,NOW!

  • Rick Saunders says:

    In order to fix a problem, you have you have to remove the source. Vote Bidon and all his people out. Vote for Trump, we need a businessman in the White House.

  • Floyd ledford says:

    Impeach bidon if it was Trump you would have him impeach put trump back in office we might be able to get the USA straighten out

  • carmine says:

    Trump had the correct ideas. Unfortunately his smart mouth, name calling and disrespectful behavior towards anyone that disagreed with him got him into trouble and nobody wanted to work with him. You can’t insult someone and then expect them to listen to your plan much less vote for it. Everything Trump did for the economy and manufacturing industry was correct and if he shut up and acted respectful towards others he would still be in office and this country wouldn’t be in the mess it’s in now. Biden is more interested in putting votes in the Democratic column than fixing problems. We need a business person with good people skills to lead this country. Someone who will say that Americans have the opportunity to make a good life if you want it. And you have the opportunity to make a poor life if you want it. I have the pleasure of working construction with several LEAGAL immigrants. All came here 15 to 20 years ago. Every one of them owns a house, has money in the bank, has a valid drivers license and retirement plans. They all had to learn the english language and dispite their thick accent they pulled ahead of other natural born Americans. I am sick and tired of hearing “someone is holding me back”. It’s up to you to live the American dream. It’s in your grasp, but you will need to work hard, sacrifice, put in the time, ignore the BS and rise above those that don’t believe in you. Most importantly, to vote against politicians who are giving it all away just to win votes.

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