U.S. Treasury sees economy still expanding in 2022 despite Q1 GDP drop
The U.S. economy is expected to continue its expansion this year despite a surprise contraction in the first quarter, the U.S. Treasury's chief economist said on Monday, adding that inflation may be peaking.
Benjamin Harris, assistant secretary for economic policy, said in a statement to the Treasury Borrowing Advisory Committee that there may be downward revisions to private GDP forecasts for 2.3% growth on a fourth-quarter comparison after the 1.4% first quarter decline in real GDP.
"Although this estimate may be revised down — and downside risks remain to the outlook — the U.S. economy is expected to continue its expansion this year," Harris said. "Waning fiscal and monetary stimulus along with recovering labor supply should help balance labor markets and relieve some inflationary pressures."
The statement was issued as part of the Treasury's May quarterly refunding process. The Treasury said on Monday that it expects to pay down $26 billion of debt in the second quarter, compared to a January estimate of $66 billion in net borrowing, primarily due to an increase in receipts.
Harris said that while lower exports, higher imports and low inventory investment caused the decline, private consumption and fixed investment remained strong.
He said that supply-demand mismatches have driven headline and core inflation higher so far in 2022, with further increases in headline inflation driven by higher energy and grain prices due to Russia's invasion of Ukraine.
"Still, core inflation may have peaked in spring 2022 and started to ebb, given a further waning of the pandemic, government efforts to contain energy prices, and an easing of supply bottlenecks in some markets," Harris said.
"Although this estimate may be revised down — and downside risks remain to the outlook — the U.S. economy is expected to continue its expansion this year," Harris said. "Waning fiscal and monetary stimulus along with recovering labor supply should help balance labor markets and relieve some inflationary pressures."
The statement was issued as part of the Treasury's May quarterly refunding process. The Treasury said on Monday that it expects to pay down $26 billion of debt in the second quarter, compared to a January estimate of $66 billion in net borrowing, primarily due to an increase in receipts.
Harris said that while lower exports, higher imports and low inventory investment caused the decline, private consumption and fixed investment remained strong.
He said that supply-demand mismatches have driven headline and core inflation higher so far in 2022, with further increases in headline inflation driven by higher energy and grain prices due to Russia's invasion of Ukraine.
"Still, core inflation may have peaked in spring 2022 and started to ebb, given a further waning of the pandemic, government efforts to contain energy prices, and an easing of supply bottlenecks in some markets," Harris said.
Comments
Oh ya 324 days ago
Oh they are going to pay down 26 billion. They state that because they know that big number will impress you. What they do not say is they owe 31 TRILLION. so their 26 billion is just a drop in the bucket as there is 1000 billion in a trillion and they owe 31 trillion. If there was a billion dollar bill they would owe 31000 bills to someone and they are going to pay off 26 of that 31000. This nothing more than a lie from the government as inflation is goingvto get much worse. Heat wave in the west and too much rain in the east. About 9 food processing plant fires in the last 2 months. Like bill the devil gates said they plan to kill you. Clot shots if possible or starve you if need be.
