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US Data Response

Retail Sales (Jul.)

While overall retail sales were unchanged in July, the details were far more encouraging, with a price-related fall in gasoline sales freeing up households to increase spending on other goods. With prices no longer rising rapidly, the increase in underlying retail sales is consistent with a rebound in real consumption at the beginning of the third quarter.

17 August 2022

US Data Response

Industrial Production (Jul.)

The 0.6% m/m rise in industrial production in July was much stronger than we expected and provides another clear sign that the economy is still in expansionary territory. That said, the likely drag on manufacturing from the impending global economic downturn means that the resilience of production may not last for long.

16 August 2022

US Economics Weekly

More good news on inflation coming soon

The drop back in CPI inflation in July wasn’t enough alone to convince Fed officials to change their plans for interest rate hikes. But we expect the better news on inflation to continue over the coming months, which will eventually persuade the Fed to halt its tightening cycle early next year.

12 August 2022

Key Forecasts


More good news on inflation coming soon

US Economics Weekly

30 November 2022

Our view

The risks of a recession over the coming months are still low, but the impact of higher energy prices and interest rates means real economic growth will be consistently below its 2% potential pace over the next couple of years. With inflation set to remain elevated over the next few months, we expect the Fed to deliver another 200bp of hikes this year, with another 75bp move in July. We still expect a fall in core inflation and well below-trend growth to prompt the Fed to slow the pace of hikes later this year, and to stop hiking rates altogether in the first quarter of 2023, with the fed funds rate peaking at 3.75-4.00%.

Latest Outlook

US Economic Outlook

Economy to avoid recession narrowly

We expect the economy to avoid a recession only narrowly, as higher interest rates trigger a contraction in residential investment and weakness in consumption growth. Core inflation has been stronger than we expected this year but, on balance, we are more confident that it will eventually return to the 2% target, allowing the Fed to reduce nominal interest rates in late-2023 and 2024.

19 July 2022