US economic resilience amid supply constraints and persistent inflation

The US economy has lost some luster, but demand appears resilient in the face of lingering supply-chain disruptions. With the health situation having improved considerably over the past few weeks, consumer spending is firming and high frequency data points to an acceleration in employment growth. Still, there is no escaping the fact that limited supply and persistent inflation is weighing on activity. As a result, we’ve trimmed our GDP growth forecast by 0.1ppts to 5.4% in 2021 and 4.3% in 2022.

What you will learn:

• The US consumer still has plenty of wind in his sails. In the coming months, an improving health situation should spur renewed consumer optimism while a resilient jobs recovery should support income growth. 
• The September jobs report showed a marked slowdown in job creation amid lingering health concerns and persistent labor supply constraints. 
• Headline inflation firmed 0.1ppt to 4.3% y/y in August while core inflation held steady at 3.6% y/y – where it’s been for the past three months – reflecting resilient demand and ongoing supply restraints.