• Inventory rebound anticipated.

• CPI projection raised almost one-half point next year.

The National Association for Business Economics raised slightly its 2022 real GDP forecast to 3.6% (Q4/Q4). That follows 4.9% growth in 2021 versus 5.6% expected in September, down due to coronavirus impacts. GDP is expected to rise to 4.5% this quarter then 4.6% in Q1 2022. Personal consumption expenditures are forecast to grow 3.5% in 2022 after rising 7.9% this year. Business fixed investment is expected to rise 5.9% next year after gaining 7.6% in 2021. Expected growth of 0.6% in residential investment is expected to follow a lessened 9.1% 2021 gain. Government spending growth is expected to improve 1.8% this year after rising 0.7% in 2021. Deterioration in net exports is forecast to continue at a slightly slower rate next year. U.S. export growth is expected to pick up to pick up to 5.5% in 2022 from 3.8% this year while import growth should slow to 4.8% from 13.4% in 2021. Accumulation of inventories is expected to resume in 2022 following two years of decumulation.

Housing starts are forecasted to rise minimally next year to an average 1.59 million units after increasing to 1.58 million in 2021. Light vehicle sales of 16.0 million units in 2022 are expected to follow 15.2 million sales this year. Sales will thus remain below the 2016 peak of 17.5 million. An average monthly gain in payroll employment of 337,000 next year should follow a 564,000 average monthly gain in 2021. Expectations for the unemployment rate in 2022 place it at 4.0% after 5.4% this year.

The Consumer Price Index is projected to rise 2.8% Q4/Q4 in 2022, revised from 2.4%, following a 6.0% gain this year, revised from 5.1%. Price inflation next year, as measured by the PCE price index, is expected to total 2.6% (Q4/Q4) in 2022 and 4.9% this year. The chain PCE price index excluding food & energy should rise 2.6% next year (Q4/Q4) after gaining 4.1% in 2021. The cost of crude oil is expected to average $70 per barrel at the end of 2022 after rising to $79 this year from $47 in 2020.

The forecasted 2.10% interest rate on a ten-year Treasury note at the end of 2022 compares to 1.60% at the end of this year. The Federal funds rate is projected to rise to 0.375% at the end of next year from 0.125% currently. After-tax corporate profits should rise 3.0% in 2022 following a 23.2% strengthening in 2021. The expected Federal government budget deficit should ease to $1.397 trillion in FY22 from $2.772 trillion this year. The deficit hit a peak of $3.129 trillion in 2020.

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