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Global Economic Outlook – September 2022 United States: Economy poised to stall The Federal Reserve has Economic growth is expected Fiscal stimulus is expected to committed to raise rates and to slow below the economy’s remain limited as pandemic aid hold them high for longer, to potential rate of growth, wanes and infrastructure projects slowly bring inflation back to employment is expected to take time to ramp up. Midterm its 2% target. The goal is to stall and lose ground as we get elections will play a key role in prevent a more entrenched into 2023. The unemployment determining whether the White and persistent cycle of inflation rate is expected to cross 5% House can deliver more on its from taking root with a mild by year-end 2023 and 5.5% promises to curb climate change but prolonged recession. before inflation fully cools. and deal with social issues. Overall economic growth hit a wall in 2022, after surging at Table 1: KPMG forecasts for the U.S. its fastest pace since1984 in 2021. Real GDP contracted for 2021 2022 2023 the first two quarters of the year; a phenomenon usually associated with a recession. The U.S. is not in a recession, GDP 5.7 1. 5 -0.1 yet. Payroll employment surged by 2.8 million jobs in the Inflation 4.7 8.2 3.8 first six months of the year, twice the annual pace of the 2010s. Consumer spending slowed but did not collapse. Unemployment rate 5.4 3.7 4.3 That means that the losses we endured did not meet the Source: KPMG Economics, Bureau of Economic Analysis, Bureau of Labor Statistics. depth and breadth of losses typically associated with a Note: Forecasts are dated as of September 2, 2022. GDP and inflation are year-over-year % change. recession by the Business Cycle Dating Committee of the The unemployment rate is an annual average. Numbers are percentages. National Bureau of Economic Research (NBER), the official arbiter of business cycles. That begs the question: Why do most Americans believe we were in a recession? Because the surge in inflation that they experienced eroded all they had gained in wages since the economy reopened and then some. Rate hikes and the collapse in housing are expected to take a larger toll on consumer spending by the turn of the year. Home sales and construction activity have already cratered; housing prices will be the next shoe to drop. Housing is one of the single largest triggers to additional consumer spending; now, it is working in reverse. Business investment is expected to contract after playing catch-up to supply chain delays over the summer. Spending on structures and equipment will be hardest hit. Spending on intellectual property, automation and cyber security is expected to remain buoyant. © 2022 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. 7

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