US: Macroeconomic Country Outlook
- GlobalData forecasts the real GDP to grow by 4.4% and household consumption by 3% in 2022.
- The US was ranked sixth out of 136 nations in the GCRI Q4 2021.
- According to GlobalData, the total revenue from leisure travelers for luxury hotels in the US is expected to grow at a robust CAGR of 25.2% between 2021 and 2024.
PESTLE Summary
- Political: No nuclear deal between US-Iran. As of January 2022, an eighth round of negotiations aimed at restoring Iran’s landmark 2015 nuclear deal is under way in Vienna, where Iran is still looking for guarantees that US sanctions will be lifted. On the other hand, the US is unlikely to strike a deal with Iran to save the 2015 Iran nuclear agreement unless Tehran releases four US citizens. The former President Trump pulled the US out of the deal in 2018, reimposing economic sanctions against Tehran. Iran responded by breaching many of the deal’s nuclear restrictions, to the point that Western powers say the deal will soon be scraped out completely.
- Economic: US economy is expected to grow by 4.4% in 2022. According to GlobalData, the US economy is expected to grow by 4.4% in 2022, compared to 5.7% real GDP growth in 2021. The overall growth rate is forecast to slowdown in 2022 due to major headwinds such as high inflation and rise in omicron cases. Moreover, manufacturing output remained subdued in December 2021 due to supply chain disruptions and high energy prices. The uptick in input prices was the slowest for six months, and firms recorded softer increases in selling prices amid efforts to induce customer spending. Persistent high inflation amid global supply shortages, rise in Omicron cases and possible monetary tightening by the Fed will likely cause GDP growth rates to slowdown in 2022.
- Social: Female participation in labor market. More women came back to the workforce in final months of 2021. Overall, the female participation rate in the labor force increased from 57.4 in June 2021 to 57.8 in December 2021. Moreover, the participation rate for prime-age female workers (25 to 54 years old) increased to 75.9% in December 2021, according to the US Bureau of Labor Statistics. However, it remains below that of male participation rate and lower than before the COVID-19 pandemic. The recession in 2020 amid COVID-19, wiped out years of advances in wages and employment for women, who still bear the brunt of child-care. However, in 2021, some women returned to work as schoolsreopened.
- Technology: Strategy for digital assets markets. The Biden administration is preparing to release an initial government-wide strategy for digital assets in February 2022 and task federal agencies with assessing risks and opportunities that digital assets pose. The latest draft the executive order will focus is on economic, regulatory and national security challenges posed by cryptocurrencies. It would call for reports from various agencies due in the second half of 2022. In November 2021, banking regulators in the US have announced a plan to clarify rules and regulations around how banks can use cryptocurrencies in 2022, at a time when governments, including India, are weighing risks associated with cryptocurrencies and safeguard investors.
- Legal: According to the Global Competitiveness Report in 2019, in terms of efficiency of the legal framework in challenging regulations, the nation was ranked eighth out of 141 countries. The US Department of Labor (DOL) implemented regulations affecting disproportionate wage hikes for H-1B and green card petitions. The move will make it easier for H1B visa holders to extend their stay in the US.
- Environmental: Poor performance in terms of EPI. The Environmental Performance Index (EPI), released by Yale University, ranked the US 24th in the 2020 EPI Index, with a score of 69.3 out of 100. The EPI ranked 180 countries on nine performance indicators, including health impacts, air quality, water and sanitation, water resources, agriculture, forests, fisheries, bio-diversity and habitat, and climate and energy. The US ranking was behind other advanced countries such as Switzerland (third), the UK (fourth) and Canada (20th) during the same year. As of 2021, the US has generated huge amounts of plastic, which will have a negative impact on oceans. The government is in dire need of a new strategy to curb the vast amount of plastic that ends up in oceans.
Key Fundamentals
Macroeconomic Outlook
- The US has one of the most developed economic systems in the world, enabling it to overcome deep global economic crises.
- Despite the Omicron variant, the US economy is expected to grow by 4.4% in 2022, according to GlobalData. With rapid vaccination rate, along with new policies to attract investment, will turn the gear up for the manufacturing and business sectors in the coming months which will add to the overall GDP growth
- Despite the Omicron surge, the US added 467,000 jobs in December 2021. According to GlobalData, retail trade growth picked up by 7.9% in December 2021, indicating high consumer demand
- President Joe Biden formally announced $1.9 trillion COVID-19 stimulus plan in January 2021. In March 2021, Biden signed the $1.9 trillion piece of legislation passed by Congress along with extension of unemployment benefits, and effective vaccination deployment
- The Biden administration also plans to raise nearly $4 trillion in additional revenue over a decade by increasing tax rates for top income households
- To aid infrastructure development, Biden administration to spend $1.2 trillion on infrastructure over next decade. This plan included $7.5 billion over next five years on electric vehicle charging stations, and $110 billion for construction, repair, and research for roads and bridges
GlobalData Country Risk Index (GCRI) - Q4 2021
The US was ranked sixth out of 136 nations in the GCRI Q4 2021. The country’s score is in the very low-risk nations band (below 30). The US’s overall risk score is lower than the North America and the world average in GCRI Q4 2021. The country had an overall score of 21.7 and its stable political framework makes it one of the safest countries for doing business in the world. However, its risk score was relatively higher in legal parameter as compared to North America and the world average.
GCRI Methodology
GlobalData’s unique Country Risk Model determines the existing and future level of country risk by assessing various qualitative and quantitative factors. The index is designed to help firms formulate their global business strategies based on historical developmentsin an economy. The Country Risk Index incorporates the latest available macroeconomics, political, social, technological, environmental, and legal data from a range of recognized national and international statisticalsources and incorporates proprietary data from GlobalData. North America countries in this publication includes Canada and the US.
About the report
GlobalData Macroeconomic Outlook report is designed to provide detailed macro-economic analysis which will help clients in their business planning, investment and strategic decisions, and analysis. It also provides a quick view of the current situation and the risk score of the country in comparison to region and world based on the proprietary risk framework. The report also highlights key strengths, weaknesses, opportunities, and threats in each of the pillars of PESTLE, economic growth prospects, and key events which can impact the country’s future outlook.
More details: United States of America (USA) PESTLE Insights - A Macroeconomic Outlook Report
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