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Economy in Brief

NABE Projects Firm Growth in 2022, as in 2021
by Tom Moeller  March 1, 2021

• Overall economic growth benefits from low price inflation.

• Improvement versus 2020 emerges across sectors.

• Interest rates increase.

The National Association for Business Economics expects 4.0% real GDP growth in 2022 following a 4.8% rise during 2021, revised from 3.8% forecasted earlier. Quarterly growth is expected to average 3.0% next year following a 4.8% rise this year. Personal consumption expenditures are forecast to strengthen 4.1 % in 2022 after rising 5.4% this year, revised from 4.1%. Business fixed investment is expected to rise 5.0% after gaining 6.6% this year, revised from 3.7%. Expected growth of 4.7% in residential investment is expected to follow a 12.4% strengthening in 2021, revised from 6.8% previously expected. Government spending growth is expected to pick up to 1.3% from 0.7% this year, earlier estimated at 0.2%. Deterioration in net exports is forecast to continue steadily next year. Slow recoveries abroad are expected to limit U.S. export growth to 7.0% in 2022 versus a 4.7% rise in imports. In 2021, exports are projected to rise 8.0%, while imports are forecasted to surge 12.2%. The expected rate of inventory investment is expected to steady in 2022, picking up from sharp decumulation in 2020.

Housing starts are forecasted to hold steady next year at an average 1.49 million units; this year's forecast was increased from 1.41 million. Expected light vehicle sales of 16.7 million units in 2022 are expected to follow 16.5 million sales this year, revised from 16.1 million. Sales will thus remain below the 2016 peak of 17.5 million. An average monthly gain in payroll employment of 258,000 next year is expected to follow a 351,000 average rise this year (earlier projected as 350,000). Expectations for the unemployment rate in 2022 place it at 4.7% after 5.8% this year, revised from 6.3%.

The Consumer Price Index is projected to rise 2.2% Q4/Q4 in 2022 following a 2.2% gain this year, revised from 2.0%. Price inflation next year, as measured by the PCE price index, is expected to total 2.0%, the same as in 2021, revised from 1.8%. The chain PCE price index excluding food & energy should rise 1.9% next year (Q4/Q4) after gaining an unrevised 1.8% in 2021. The cost of crude oil is expected to average $59 at the end of 2022 after rising to $55 at the end of this year, revised from $46 per barrel.

The forecasted 1.80% interest rate on a ten-year Treasury note at the end of 2022 compares to 1.45% at the end of this year, revised from 1.15% expected earlier. The Federal funds rate is projected to be steady around 0.130% through the end of next year. After-tax corporate profits should rise 4.5% in 2022 following a little-changed 9.2% gain this year. The expected Federal government budget deficit should ease to $1.757 trillion in FY22 from a little-revised $3.20 trillion this year.

The figures from the latest NABE report can be found in Haver's SURVEYS database.

National Association For Business Economics 2022 2021 2020 2019 2018
Real GDP (% Chg. SAAR) 4.0 4.8 -3.5 2.2 3.0
  Personal Consumption Expenditures 4.1 5.4 -3.9 2.4 2.7
  Business Fixed Investment 5.0 6.6 -4.0 2.9 6.9
  Residential Investment 4.7 12.4 6.0 -1.7 -0.6
  Gov't Consumption & Gross Investment 1.3 0.7 1.1 2.3 1.8
  Change in Real Business Inventories (Bil. $) 70.0 71.0 -80.9 48.5 53.4
  Net Exports (Bil. $) -1,158 -1,140 -926.3 -917.6 -877.7
Housing Starts (Mil. Units) 1.49 1.49 1.38 1.29 1.25
Light Vehicle Sales (Mil. Units) 16.7 16.5 14.5 17.0 17.2
Payroll Employment Average Monthly Change (000s) 258 351 -778 168 193
Civilian Unemployment Rate (%) 4.7 5.8 8.1 3.7 3.9
Consumer Price Index (Q4/Q4 %) 2.2 2.2 1.2 2.0 2.2
Chain Price Index for PCE (Q4/Q4 %) 2.0 2.0 1.2 1.5 2.0
 Chain Price Index excl. Food & Energy (Q4/Q4 %) 1.9 1.8 1.4 1.6 2.0
Fed Funds Rate (%, Year-End) 0.130 0.130 0.125 1.625 2.375
10-Year Treasury Note (%, Year-End) 1.80 1.45 0.93 1.92 2.69
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