In November, the US economy was heading through supply chain bottlenecks, the Omicron virus development, and robust inflation. Presently, the nation is gripped by surging Covid-19 daily infections, the Fed’s monetary policy tightening phase to combat inflation, improved unemployment situations, and geopolitical tensions such as the approval of the Build Back Better (BBB) plan, as well as tensions over Ukraine. The U.S. Gross Domestic Product, which measures the total output of the economy, grew by 2.3% in December for a quarter-on-quarter annualized basis, surpassing expectations of 2.1% and a previous print of 2.1%. The new strength can be credited to better consumer spending as well as improved unemployment conditions. However, prospects for a strong rebound are being clouded by the rapidly growing Omicron strain in the nation. Furthermore, with consumer prices pinching albeit a healing economy, policymakers are reducing bond purchases and preparing to hike interest rates in the next year.

Although Consumer confidence and labor market conditions have improved, Covid has upgraded itself with a new variant. The final reading of the University of Michigan's consumer confidence index was 70.6 in December, slightly higher than the preliminary estimate of 70.4 and up from 67.4 in November. The index increased as a result of large increments in income for families in the lowest third of the wealth distribution. Additionally, it is important to consider the turnaround in labor market conditions. The unemployment rate decreased to 4.2%, down from 4.6% previously in November, whereas the Labour Force Participation Rate improved marginally. With respect to that, figures stood at 61.8%, up from 61.6% in November. On the flip side, numerous flights have been canceled, and plans to return to the workplace have been abandoned. College football games and Broadway productions have been canceled, and Apple outlets in New York City have shut down. With 301,472 cases in a single day on 30th December, the U.S. set a new global record for daily average cases, with Omicron accounting for 59% of all new infections. Lately, Americans are putting pressure on the Biden administration as they spend hours waiting to be tested for Covid-19, and experts worry that the virus will 'threaten essential infrastructure' in the United States, forcing personnel at hospitals, grocery shops, and petrol stations into isolation.

Consumer prices have skyrocketed to the highest levels in nearly four decades while the Fed starts to chase inflation after a long time. The Consumer Price Index, a key indicator to measure inflation and change in purchasing power at a broader level, stands at 6.8% on an annual basis in November, the highest in the last 39 years. According to the Census, prices increased substantially, with fuel, housing, food, used cars, and trucks, as well as new vehicles all contributing significantly. In November, the energy index increased by 3.5%, while the gasoline index increased by 6.1%, as motorists paid extra to fill up their tanks. Food got more costly as well - the food index grew by 0.7% throughout the month, with 'food at home' increasing by 0.8%. In these record-high inflation times, the U.S. central bank Federal Reserve has pulled off the band-aid to start focusing on persistently high inflation. The Federal Reserve will accelerate the winding down of its stimulus program, as it ramps up its reaction to rising inflation. Additionally, the updated predictions indicate that policymakers believe three hikes are necessary for 2023 and two more in 2024. Officials increased their inflation projection for 2022 to 2.6%, from 2.2% in September, while also forecasting a decline in the unemployment rate to 3.5%.

The "Build Back Better" (BBB) plan is on hold while it has already baked many economic projections for the next year. President Joe Biden's inability to get the required votes to approve his $1.8 trillion Build Back Better proposal implies that the economic boost that was built into many 2022 estimates will be lost. For example, the expiry of the child care tax credit, which was extended in the blocked plan, would coincide with the winding down of several other stimulus programs and the beginning of the Federal Reserve's "tapering" of monetary stimulus. News that West Virginia Democratic Sen. Joe Manchin voted against the plan prompted Goldman Sachs analysts to lower their first-quarter growth projection from 3% to 2%, while also lowering their full-year estimates.

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