Stock Groups

White House sees strong GDP growth in 2022 despite additional economic risks

[ad_1]

The White House expects healthy GDP growth for 2022, despite the fact that there will be more economic risks from rising prices and Russia’s invasion Ukraine in the months ahead.

A senior administration official told CNBC that the recent rise in energy and food prices — caused in large part by Moscow’s attack on its neighbor — and ongoing supply chain hiccups are two of few “additional” risks to U.S. GDP growth this year.

However, despite these inflationary concerns most economic data point to another strong U.S. Economy as measured in job gains, household saving and real income.

The person stated that “We face real risks and challenges.” One risk is Putin’s war in Ukraine. This has serious consequences for the U.S. economy, mostly through food and energy prices.

However, “if you add it all up, the U.S. Economy is in a strong place, even though we face additional risks in months ahead,” said the official.

On condition of anonymity, the official said that White House forecasts were confidential and the administration was encouraged by the International Monetary Fund’s estimate. U.S. will see its gross domestic product grow 3.7% this year.This compares to the forecasts for economic growth in Germany of 2.1%, South Korea of 2.5% and Great Britain of 3.7%.

According to IMF projections the Russian economy is likely to shrink by 8.5% after being hit with a barrage by U.S. sanctions and allies.

As economists continue to tweak their economic forecasts, the White House remarks come at a time when many are adding red-hot inflation, tapering of growth from Covid-19 rebound, and an historically tight labor market.

President Joe BidenOfficial said that the Oval Office is supportive of these trends. They will continue exploring all possible options to lower prices.

CNBC Politics

See more coverage of politics by CNBC:

Biden has named Russian President Vladimir Putin as the source of U.S. inflation’s latest spike, 8.5%. Biden now refers to this rise as Putin’s “price hike” for energy inflation.

These data are part of why Goldman Sachs Investment Bank told its clients earlier in week that it believes there is a 35% chance for a recession within the next two-years.

Jan Hatzius (Goldman Chief Economist) wrote Sunday that continued economic growth is at risk due to a complex balancing act by the Federal Reserve.

The Fed is responsible for reducing inflation and maximising employment. He said that they must weigh the record number of jobs while trying to limit wage and price increases.

Also, the Fed needs to orchestrate what economists term a “soft land”: The Fed can control inflation by tightening monetary policy as well as higher interest rates. However, it must not force the economy into recession.

Hatzius said that history suggests this could be challenging since large falls in jobs-worker gap have only been seen during recessions here in the US. Hatzius also noted that 11 out of 14 U.S. tightening periods since World War II had been followed within two years by a recession.

Janet Yellen is the Treasury Secretary and one of Biden’s leading economic advisers. A former Fed chief, she acknowledged that a “soft landing” can be difficult but pointed out that it had been done in the past.

They are charged with a double mandate. On April 13, Fed Chair Janet Yellen stated that they will work to keep strong labor markets and bring down inflation. This has happened in the past. This combination is possible but not impossible. It will take skill and luck.

Russia’s February invasion of Ukraine caused an increase in world oil prices, and then a rise in retail gasoline prices as traders tried to grab energy from war-ravaged eastern Europe.

“Putin’s invasion in Ukraine has driven up food and gas prices around the globe. This was apparent in most recent inflation data,” Biden posted Wednesday to Twitter.

Oil and gasoline prices fell from the highs of earlier this year. West Texas crude oilThe national average price for a gallon is $4.09, up 34% from last year. However, it is up $1.22 (or 42.4%) this year.

Biden stated Wednesday that he was doing all he could to lower prices and fix the Putin Price Hike.

Biden declared last month, in an effort to address the price pressures caused by rising prices, that the U.S. would release 1 million barrels of oil per dayThe company will draw on its strategic oil reserves for six months to lower gas prices, and help fight inflation.

While previous administrations have used the country’s gas reserves in times of high gasoline prices, the size and duration of this current release are unprecedented.

For the U.S. economy, and for Democrats hoping to hold on to control of Congress following the midterm elections in December this year, inflation has become an important issue.

CNBC All-America Survey revealed that 47% said the economy was “poor,” which is the highest percentage since 2012. The economy is only rated as good or excellent by 17%, which is the lowest rating since 2014.

These numbers may be a problem for congressional Democrats should voters vote to elect Republicans in the coming year. PredictIt.org, an online betting site, gives the GOP a 86% chance to win control of the House of Representatives in 2022. The Senate has a 78% chance.

This could reduce energy costs in the short term but economists also keep an eye on how many workers are available.

According to the Labor Department, the most recent report about job openings was record-breaking. 5 million more job openings than unemployedAmericans are considered to be in an advantageous position for workers, allowing them to ask for higher wages.

[ad_2]