U.S. Economy to Slump While China, Others Soar: Study

Growth in the U.S. economy will slump this year and it will be even slower in 2023, according to a new study from the Organisation for Economic Co-operation and Development (OECD).

The OECD's Economic Outlook, published on Wednesday, projects the growth in gross domestic product (GDP) for nations around the world and found that the U.S. will lag behind countries including China, Australia and Canada.

Annual GPD is the total monetary or market value of all the finished goods and services produced within a country's borders over the course of a year and is used as a major measure of an economy's health.

The OECD found that U.S. GDP growth will slow to 2.5 percent in 2022 and fall to just 1.2 percent in 2023.

This contrasts with estimates from the Congressional Budget Office (CBO) published last month. The CBO said it expects GDP to grow 3.1 percent in 2022 and 2.2 percent in 2023.

GDP grew 10.1 percent in 2021, according to the U.S. Bureau of Economic Analysis (BEA). Newsweek has asked the CBO for comment.

By contrast, the OECD report said China's GDP will grow 4.4 percent this year and 4.9 percent in 2023, while Canada's GPD will grow 3.8 percent in 2022 and 2.6 percent next year.

Australia will see GDP growth of 4.2 percent in 2022 and 2.5 percent in 2023, while several other industrialized nations will also grow at a faster rate than the U.S. in both years, including New Zealand, South Korea—while the Euro area will see 2.6 percent growth in 2022 and 1.6 percent in 2023.

The OECD warned that several factors "will weigh on growth" such as supply chain issues and the rise in oil prices, as well as the end of monetary policies that were introduced to deal with the COVID-19 pandemic.

"Price pressures may recede with a moderation in energy prices in 2023, but inflation is projected to remain above the Federal Reserve's 2 percent target," the report read.

The annualized rate of inflation was 8.3 percent in April, near a 40-year high. Inflation figures for May will be published by the Bureau of Labor Statistics on June 13.

"Risks to the growth and inflation projections are substantial," the OECD report said. "The war in Ukraine could have a more significant negative impact on real GDP growth and could also push inflation notably higher. At the same time, further tightening in labor markets could cause nominal wages to accelerate substantially."

However, the OECD also said that wage growth "will stay strong, as the labor market is expected to remain tight" and later noted that "healthy household balance sheets could fuel a stronger rebound in consumption and there is the potential for a larger rebound in labor supply than currently projected."

U.S. unemployment in May remained at just 3.5 percent as the economy has re-opened following closures due to COVID-19 public health measures.

Despite OECD projections, the U.S. seems to be in a better position than the U.K., which OECD predicts will see a GPD increase of 3.6 percent in 2022 followed by no GPD growth at all in 2023.

Newsweek has asked the U.S. Department of the Treasury for comment.

US Economy
In this combination image, Shoppers and staff are seen in a cosmetic store at a mall on April 18, 2021 in Beijing, China, a stock image (Inset) of a wallet with a small amount of US dollars. The OECD projects U.S. GDP will grow at 1.2 percent in 2023. iStock / Kevin Frayer/Getty Images