Home Economy US recession anxieties are mounting

US recession anxieties are mounting

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Goldman economists now expect the US economy to grow 0.5 per cent in the first quarter and 1.5 per cent in the second (down from 1 per cent and 2.5 per cent previously).

For the year, Goldman expects the US economy will expand by 1.75 per cent (down from 2 per cent), although it warns the probability the US economy will dip into recession this year is roughly 20 per cent to 35 per cent.

Discretionary spending

Rising inflation already appears to be sapping the morale of US consumers, with sentiment falling to its lowest level in the past decade in February, according to the University of Michigan consumer sentiment survey.

According to the Goldman economists, the combination of rising petrol and food prices alone will “create an effective 0.7 percentage point drag on real disposable income in 2022”.

And credit card data from the Bank of America suggests that consumers, particularly those on lower incomes, have already begun to trim their spending on more…

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