We lower our 2021 real GDP growth forecast to 5.5% from 6.0%, with escalating global supply chain disruptions set to weaken US sales, production and inventories.
The key takeaways are as follows:
Supply-chain disruptions will likely persist longer than anticipated into next year.
In another forecast revision, we raise our 2022 CPI inflation projection to 3.3% from 2.9%. This is on the back of a likely delay in goods-price normalization and also spiking energy prices, in particular of coal and natural gas.
The US debt ceiling standoff adds policy uncertainty, with stakes especially high given a weakening US fiscal position and proposals of large-scale infrastructure spending on the table.