White House: Strong GDP Growth In 2022

The White House sees more risks to US economic activity in the months ahead thanks to rising prices and Russia’s invasion of Ukraine, but still expects healthy GDP growth in 2022.

A senior administration official said inflation, caused in part by Russia’s attack on Ukraine, and supply chain hiccups are additional risks to US GDP growth this year.

Biden has blamed Russian President Vladimir Putin for the latest jump in US inflation, which last month hit 8.5%. “I’m doing everything I can to bring down prices and address the Putin Price Hike,” Biden wrote Wednesday.


A senior administration official said that the recent rise in energy and food prices — caused in large part by Moscow’s attack on its neighbor — and ongoing supply chain hiccups are two of few “additional” risks to US GDP growth this year.

Despite the inflationary concerns, most economic data points to another strong year for the US economy as measured by job gains, household savings and real income, the official said. “We are facing real risks and some challenges,” the person said. “One risk is the war that Putin has started in Ukraine. That has real effects on the US economy, largely through energy prices and food.”

But “when you put it all together, the US economy is in a strong position, even as we face some additional risks in the months ahead,” the official said.

The official, speaking on the condition of anonymity to discuss private White House forecasts, said the administration was encouraged to see the International Monetary Fund estimate that the US will see its gross domestic product grow 3.7% this year. That compares with forecasts of economic growth of 2.1% for Germany, 2.5% for South Korea and 3.7% for the United Kingdom.

The Russian economy, overwhelmed by a barrage of sanctions imposed by the US and its allies, is expected to contract by 8.5%, according to IMF projections. The remarks from the White House come as a growing number of economists tweak economic forecasts to include red-hot inflation, tapering growth from the Covid-19 rebound and a historically tight labor market.

President Joe Biden is sympathetic to those trends, the official said, and will continue to explore all viable options available to the Oval Office to quell prices. Biden has blamed Russian President Vladimir Putin for the latest jump in US inflation, which last month hit 8.5%, and has begun to refer to energy inflation as “Putin’s price hike.”

Data like that is part of the reason that investment bank Goldman Sachs told its clients earlier this week that it thinks there’s a 35% chance of a recession in the next two years. The main risk to continued economic growth stems from a tricky balancing act facing the Federal Reserve, the US central bank. The Fed, in charge of cooling inflation and maximizing employment, must now weigh that record level of job openings while also trying to keep a lid on wage and price acceleration.

In other words, the Fed must orchestrate what economists refer to as a “soft landing”: Control inflation with tighter monetary policy and higher interest rates without tipping the economy into recession.