GDP: 4.0% GDP Growth in 2022

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GDP will likely grow by 4.0% next year, after rising 5.6% in 2021. Consumers will pull back some spending because of price concerns. Lower-income households will be most affected by higher prices. The car and truck shortage will last well into this year, keeping vehicle prices high. Gasoline prices are likely to stay up. Inflation pressures in general will stay elevated because of supply issues. However, consumers have saved an average of $21,000 per household more than usual since the start of the pandemic, so they will continue to spend when supply shortages are corrected.

The high level of COVID-19 infections may dampen consumer enthusiasm in the short term for eating out and traveling, and will likely delay some business plans to reopen offices. However, expect the infection rate to start declining by the end of January, with a boost to consumer services spending by the spring.

A factor supporting growth this year is that retailers and manufacturers will have to rebuild inventories, which are still at very low levels. That will keep manufacturers busy.

Corporate profit margins hit a record 12.7% of GDP in Q3 2021. However, while revenue growth will continue strongly, higher labor and shipping costs will cut into profits this year to some extent.

Source: Department of Commerce: GDP Data