S&P Global Economist Expects 'Spring Chills' for U.S.

Today, S&P Global Ratings published an article "Economic Outlook U.S. Q2 2022: Spring Chills", according to which the U.S. economic activity continued to be primarily healthy through early March. However, the Russia/Ukraine conflict exacerbated already disturbing pricing pressures related to the ongoing supply chain disruptions.

The article quoted Beth Ann Bovino, U.S. Chief Economist, who expects the economic damage from the conflict to reduce the country's GDP growth to 3.2% in 2022, in-line with the preliminary forecast in early March, but 70 bps lower than the November forecast of 3.9%. This is driven by continued supply chain disruptions, worsened by the Russia-Ukraine conflict, higher prices for food and energy, and Fed's much more aggressive policy against higher prices.

S&P Global now anticipates the Fed to make seven rate hikes in 2022, reducing the balance sheet size starting in May, and four to five more hikes in 2023. They also expect a 50-bp hike as soon as May, with more 50-bp rate hikes increasingly likely.

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