Moody’s cut forecasts for US economic growth this year and next as a result of increasingly tight monetary policy to contain escalating inflation.
In the agency’s view, the slowdown in activity reflects factors beyond the control of the Federal Reserve (Fed, the US central bank), such as supply bottlenecks and rising energy prices.
According to a report, the institution lowered its projection for a rise in the US Gross Domestic Product (GDP) in 2022, from 2.8% to 2.1%, and in 2023, from 2.3% to 1.3%.
According to the analysis, the unemployment rate is expected to rise from the current “low level” of 3.6% to 4.0% next year, due to a weakening in the pace of hiring and an increase in the strength of participation in the labor market. job.
Moody’s also predicts that consumer inflation will remain high, but will cool from the annual rate of 9.1% in June to 7.0% at the end of this year and to 2.3% at the end of 2023.
no recession
The Fed’s tightening of monetary policy should slow US economic growth, but not push the country into a recession, assesses Moody’s.
“Overall, the fundamental strength of the economy belies the idea that a recession is imminent or a scenario already guaranteed,” explains the agency.
The institution, however, understands that the slowdown in activity is necessary for a more sustainable growth model.
According to the analysis, macroeconomic volatility should persist throughout the year, with sudden fluctuations in indicators.
“It remains to be seen whether the currently strong fundamentals help the economy to withstand the ongoing monetary tightening and resist external shocks”, he points out.
Moodys adds that, despite the risks, the US can still avoid a stagflation scenario, that is, a prolonged period of slow economic growth combined with high inflation.
According to the agency, the current context is different from the 1970s, because the unemployment rate remains low and there is more clarity about the effectiveness of monetary policy.
Source: CNN Brasil
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