The U.S. economy closed 2023 on a high note defying predictions of a downturn. The economy displayed a hearty expansion of 3.2% in the last quarter, while simultaneously demonstrating a cooling inflation.
This performance gives an interesting backdrop to the upcoming presidential elections.
Q4 Growth: A Boost to the Economy
In 2023’s final quarter, the U.S. economic growth diminished slightly from its sizzling pace in the third quarter but maintained a robust 3.2%.
The Commerce Department shared this figure, a marginal decline from an initial forecast, yet a remarkable accomplishment considering economic predictions. This consistent growth fuels optimism about the economy’s resilience against challenges such as high interest rates.
Researchers attribute the robust GDP growth to healthy consumer spending, export growth, and a surge in state and local government spending.
Among the key contributors, consumer spending, the lifeblood of the U.S. economy, grew at an impressive 3% annual rate in the same period.
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Subsiding Inflation Fears
Simultaneously, the nation showed signs of shedding its high inflation skin. The Federal Reserve’s favored measure of inflation — the personal consumption expenditures price index recorded an annual increase of 1.8% in the fourth quarter, a decline from 2.6% in the previous three months.
Rubeela Farooqi, chief U.S. economist at High Frequency Economics, supported this narrative, “We think growth will slow but will remain positive over coming quarters.”
Farooqi asserts that the economy could find a much-needed boost from anticipated Fed rate cuts in the approaching year. The central bank expects to trim its benchmark interest rate thrice in 2024.
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Maintaining Momentum in 2024
Considering the current trends, economic analysts predict continued growth for the U.S. economy in the year 2024. The IMF, for instance, projects an encouraging 2.1% growth for the U.S. economy – more than double in comparison to other advanced economies like Japan, Germany, the U.K., France, and Italy.
In an environment of easing inflation, sturdy GDP growth, the U.S. economy is poised for a promising 2024. Successful rate hikes maneuvered by the Federal Reserve, a low unemployment rate, and stable increases in hourly wages build a compelling case for an “economic soft landing.”
The Bigger Picture: Upcoming Elections
However, as we look forward to 2024, the state of the economy will play a crucial role in shaping voter sentiment ahead of November’s presidential election.
While an easing inflation and healthy economic growth do paint a positive picture, consumers continue to grapple with prices that are 17% higher than they were three years ago. The promise of a thriving economy will be put to test as the year unfolds.
In sum, despite initial fears, the U.S. economy has evaded a prospective recession and turned towards promising growth and declining inflation. The spotlight now shifts to 2024, predicted to be a year of continued growth amid simmering voter discontent over high consumer prices.
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Author
Edel is an Editor with a decade of print and digital media experience – specializing in Science, Technology, Finance, Entertainment, and Advertising. He is also a stock and cryptocurrency investor. When Edel is not editing or analyzing charts, you can find him with his DIY lightbox taking timelapses of plants.
