Despite the less favorable financial conditions, the expansion of productive capacity to face supply difficulties will promote investment in the United States, projected the credit insurer Coface.
The investment will also begin to be supported by the infrastructure plan enacted in November 2021.
Aiming primarily at transportation infrastructure, the plan includes $550 billion in new spending over the next decade.
However, even if the social and environmental spending plan under the Build Back Better Act (BBBA) is approved, the fiscal impulse will continue to be negative due to the withdrawal of aid related to the pandemic.
At the same time, according to Coface, despite a recovery among the country’s main trading partners and a gradual easing of supply chain constraints, domestic demand, with its high import content, is expected to be in a negative contribution to the growth of net exports.
Thanks to a strong recovery in growth in 2021, fueled by a rebound in private consumption and accommodative fiscal and monetary policies, the United States was the first G7 country to see GDP return to pre-pandemic levels.
Although activity will slow down in 2022, it will remain strong, still driven by household consumption, which represents more than two-thirds of GDP, according to Coface.
If the health situation surrounding the Covid-19 pandemic makes it possible to avoid the reimposition of restrictions, household spending will be supported by pent-up demand for services.
In addition, consumption will benefit from the savings surplus accumulated during the crisis, estimated at more than 2.5 billion dollars.
Projections for the United States include that a tighter labor market, with unemployment falling to 4.2% at the end of 2021 from a peak of 14.8% in April 2020, will boost wages, but inflation will erode purchasing power.
After skyrocketing in 2021, mainly in energy and vehicle prices, inflation will remain high in 2022.
However, inflation should gradually decline, particularly in the second half of the year, as supply problems ease, according to Coface estimates.
Policy tightening by the Federal Reserve (Fed) will also help bring inflation closer to its 2% target, although it will likely still exceed this level by the end of 2022.
Once the Fed ends its asset purchase program, which is likely in March, the central bank is expected to raise its policy rate by 25 basis points each quarter.