The US economy is growing near trend despite layered supply shocks, and the balance of risks is to the upside if the US-Iran pact to reopen the Strait of Hormuz proves durable, as per S&P Global.
It expects a trend-like growth of 2.1 per cent in 2026, and to average 1.9 per cent in 2027 and 2028.
A breakdown of the pact would destroy purchasing power and propagate supply-chain shortages beyond crude oil.
Headline CPI jumped to 4.2 per cent in May on an energy-driven spike, but core held at 2.9 per cent. It expects inflation to peak this quarter and ease as cost-push pressure fades against softening demand, the company said in its economic outlook for the country for the third quarter this year.
The Federal Open Market Committee held the rate at 3.5-3.75 per cent in June, and the dot plot removed the prior easing bias, opening the door to a hike. It expects no change to the policy rate this year, though the balance of risks is tilted toward hikes that would unwind last year’s insurance cuts.
The central risk is the durability of the Strait of Hormuz reopening; a breakdown would destroy purchasing power and propagate supply-chain shortages well beyond crude oil, into refined petroleum, artificial intelligence-related high-tech, fertilisers and other petrochemicals. This is a demand-growth risk layered on an already supply-constrained economy, the company said in a press release.
Fibre2Fashion News Desk (DS)
