.Omicron, inflation, and a more hawkish Fed will dampen US economic growth prospects in 2022

The Conference Board forecasts that US Real GDP growth will slow to 2.0 percent (quarter-over-quarter, annualized rate) in Q1 2022, vs. 6.9 percent in Q4 2021. Our prior forecasts had assumed that a “winter wave” of COVID-19 would dampen economic growth in Q1, but the scale of infections was much larger than anticipated. We are therefore lowering our first quarter projection by 0.2 percentage points. Economic growth through the remainder of the year will also be lower than previously projected, due to persistent inflation and an increasingly hawkish Fed, but the economy will still grow at healthy rates above 2 percent under current assumptions.