@Observable is being re-init every time view is modified

I am surprised at what I am seeing with the new @Observable framework in iOS 17.

It seems that if the view containing the @State var, ie viewModel, is modified, then the init of that viewModel will also be called. This is not the behavior of the prior StateObject method of using a viewModel.

As I understand the @State should not be reinitialized on redrawing on the View, is this the expected behavior?

Example:

struct ContentView: View {

@State var offset = false

var body: some View {
    VStack {
        InnerView()
            .offset(x: offset ? 200 : 0)
            
        Button("Offset") {
            offset.toggle()
        }
    }
}

}

// iOS 17 Observable method:

struct InnerView: View {

@State var viewModel: ViewModel

init() {
    self._viewModel = State(wrappedValue: ViewModel())
}

var body: some View {
    VStack {
        Image(systemName: "globe")
            .imageScale(.large)
            .foregroundStyle(.tint)
        Text("Hello, world!")
    }
    .padding()
}

}

@Observable class ViewModel {

init() {
    print("ViewModel Init")
}

}

// StateObject method:

struct InnerView: View {

@StateObject var viewModel: ViewModel

init() {
    self._viewModel = StateObject(wrappedValue: ViewModel())
}

var body: some View {
    VStack {
        Image(systemName: "globe")
            .imageScale(.large)
            .foregroundStyle(.tint)
        Text("Hello, world!")
    }
    .padding()
}

}

class ViewModel: ObservableObject {

init() {
    print("ViewModel Init")
}

}