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After lowering their growth forecasts for this year’s third and fourth quarters, many economists see a brighter 2022 ahead, The Wall Street Journal found, with analysts expecting production and spending delayed by this year’s Delta virus and supply chain tangles to appear next year instead.
There are early signals that things are looking up, analysts claim.
During the week ending 28 September, restaurant seatings were down just 8 percent compared to the same week in 2019, a less severe difference than early last month; hotel occupancy was 63 percent in the week ending 18 September, trending up again after dipping during the two weeks before, data firm STR reported.
Room and restaurant reservations at Colorado’s Boulderado Hotel are now 5 to 10 percent above 2019’s levels at this time of year, the WSJ said.
Air travel lulled in late August but showed signs of recovery during the last two weeks of September, figures from the U.S. Transportation Security Administration showed.
In June, the U.S. Federal Reserve projected 3.3 percent GDP growth in 2022; last month, it raised its forecast to 3.8 percent.
U.S. economic output will be 4.2 percent in the third quarter, 6.5 percent this quarter, and 5.1 percent in 2022’s first quarter, Allen Sinai, chief economist and strategist at Decision Economics, has predicted.
During the spring and summer, consumers sated their pent-up demand for long-lasting goods such as cars and appliances, economists told the WSJ.
This will ease demand and allow supply chains, manufacturers, wholesalers, and retailers time to catch up with demand, especially after the holiday shopping crunch, they predict.
A recent rise in the number of building permits issued may indicate that contractors are able to find materials again, a sign that shortages and supply chain issues in that industry could be easing, Aneta Markowsa, Jeffries’ chief economist, suggested in a WSJ interview.
“The consumer is in great shape,” she said. “They have the firepower. They have the ability to spend.”
TREND FORECAST: Some consumers may have money to spend, but it does not buy as much as it used to. Inflation is eating up consumers’ purchasing power and shortages of a range of materials, worsened by the supply chain crisis, is giving them less to spend their money on.
Economists raising their expectations for the first quarter of next year are not factoring in the months it will take to untangle the supply chain knots we reported in “World’s Supply Chain Snarled Until Well Into Next Year” (14 Sep 2021 ).
They also leave no room for inflation to continue unchecked, not only while supply chain tangles are worked out but also while key shortages last, especially of computer chips and essential minerals.
The Organization for Economic Cooperation and Development, a club whose members include the world’s richest countries, has forecast that prices in 2022 will rise more than most analysts are expecting, as we reported in “Inflation Still Inflating” (28 Sep 2021).
Also, the Asian Development Bank has forecast China’s economy to slow next year, as we reported in “Development Bank Trims Asia Growth Forecast” (28 Sep 2021).
As the world’s second largest economy, a slowdown in China will drag down global economic output as well. Therefore, we forecast U.S. economic growth to remain subdued through at least the first quarter of 2022.