Story By Curtis Dubay, Senior Economist, U.S. Chamber of Commerce
As we head into 2022, now is a good time to look at where the economy may be heading and where the all-important level of inflation will be next year.
The U.S. Chamber of Commerce Chief Economists Committee consists of chief economists from businesses across the variety of industries that comprise our economy. The committee recently met to discuss the members’ outlooks for 2022. We also surveyed them on what they think growth and inflation will be next year.
When it comes to economic growth, on average the committee see the economy growing 4% next year. However, some members see growth coming in as low as 2.8% or as high as 4.5%. They foresee the first quarter being the strongest quarter of the year and the fourth being the weakest.
When it comes to inflation, the committee sees it running high until the middle of 2022. The average forecast is for 4.6% inflation at the end of the second quarter. The committee expects inflation to lessen in the second half of the year, ending 2022 at 3%.
The committee’s inflation forecast aligns with the Federal Reserves’. The Fed recently released its latest inflation forecast. It sharply revised its estimate for 2021 from 4.2% to 5.3%, but only increased its estimate for 2022 from 2.2% to 2.6%. It too sees inflation cooling over the course of next year.
The economy should be strong next year. Policy mistakes, like Congress passing Build Back Better, which would worsen inflation, would drive growth down. Policy improvements, like those that encourage workers to return to the labor force and loosening regulations that are hampering our supply chain, could drive growth even higher in the new year.