Fitch says Federal Reserve rate policy, inflation to weigh on US consumer health in 2023

RATINGS agency Fitch on Tuesday said it expects a strong labour market and consumer demand to cushion the impact of a likely recession in the United States in 2023.

The ratings agency said that consumer spending will drive a modest expansion in real GDP for the United States in the second half of 2022, at around 0.3 per cent per quarter.

But a slowdown in job growth, rising unemployment, aggressive interest rate policy and higher inflation is likely to take a toll on consumer spending in 2023, Fitch said.

US consumer prices rose more than expected in September and underlying inflation pressures continued to build, reinforcing expectations that the Federal Reserve will deliver a fourth 75-basis points interest rate hike next month.

Despite the continued moderation as supply chains ease and oil prices retreat from the highs seen in the spring, inflation is running way above the Fed’s 2 per cent target.

CNN first reported Fitch’s growth forecasts for the United States this year and next. REUTERS