Economic Analysis and Policy Outlook of U.S. in December 2021
Conclusions
The Omicron mutant is more contagious than the Delta mutant, which may further delay the recovery of the global supply chain, and it may be difficult for the U.S. to ease its inflation. Supply chain disruptions, labor shortage, rising raw material costs and other causes led to high inflation in the U.S. Meanwhile, the number of job vacancies and wage growth rate are also high in recent years. Despite a slight improvement in delivery capacity, the U.S. manufacturing sector still operates in a demand-driven environment with a constrained supply chain. If the adverse impact of the global pandemic on the labor force and supply chain does not improve, inflation in the U.S. is not expected to ease in the short term. Federal Reserve Chairman Jerome Powell said that the future plan on the tapering of monthly bond purchases could wrap up “a few months sooner” than anticipated, and that would open the door to interest rate hikes thereafter. We expect the Federal reserve rate to remain unchanged at the Federal Open Market Committee meetings in December.
