▶️Spending on goods +16% 🆚pre-Covid
▶️Spending on services -0.3% 🆚pre-Covid
🟢Consumer outlays on goods are 7.7% higher🆚pre Covid trend
🟡Consumer outlays on services are 3.9% lower 🆚pre Covid trend
US consumer outlays are now in line with their pre-#Covid trend while real personal income has fallen below its trend on account of reduced fiscal support and higher inflation
As a result, the personal saving rate is now below its pre-Covid level (6.3% in Feb) and near its lowest level since 2013 – indicating households have started to dip into their excess savings
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🇺🇸We expect easing #labor supply constraints & historically tight labor market conditions will draw people back into the US workforce in the coming quarters
We see the US labor force participation (LFPR) rate gradually rising from 61.6% to around 62.6% by the end 2022
Short 🧵
While the LFPR recovery is expected to undershoot the pre-pandemic rate (over 63%), the shortfall mostly reflects an aging population.
We find that the drag from baby boomers retiring (or exiting early) has offset the boost from sidelined workers re-entering the labor force.
We estimate that about 30% of the LFPR shortfall, or 0.4ppt, is structural (aging of the US population).
Remaining 70% attributable to early retirement, lost immigration, & some temporary headwinds stemming from lingering Covid fear, childcare responsibilities, & discouragement
🇺🇸 Economic impact of the infrastructure & #BuildBackBetter plans.
Our November baseline forecast includes both the bipartisan #infrastructure package and a $1.8tn BBB bill consisting of spending on social programs and climate initiatives via @OxfordEconomics
The $1.2tn #Infrastructure and Investment Jobs Act (IIJA) provides $550bn in new spending over the next 10 years.
We estimate it’ll boost #GDP growth by 0.1ppt in 2022 and 0.3ppt in 2023, with a cumulative 150,000 new jobs by the end of 2023.
Given that shovel-ready projects are a myth, we anticipate government outlays will only increase gradually, and the impact on #inflation will be minimal