2024-01-25 18:58:11
Economic growth in the United States has defied predictions of recession in 2023, even accelerating compared to the previous year, a subject that will be decisive in the race for the White House, for which a new Trump-Biden duel seems to be taking shape.
The expansion of the American gross domestic product (GDP) accelerated in 2023, to 2.5% once morest 1.9% the previous year, according to the first estimate from the Commerce Department, published Thursday.
The world’s largest economy thus escaped the much-heralded recession.
“Wages, wealth and employment are higher today than they were before the pandemic,” welcomed President Joe Biden in a statement.
Growth in the fourth quarter alone also warded off fate. It stood at 3.3% at an annualized rate, a measure favored by the United States, which compares GDP to that of the previous quarter then projects the development over the entire year at this rate.
This represents a slowdown from 4.9% in the third quarter. But it’s higher than the 2.0% that analysts expected, according to the Market Watch consensus.
“Fourth quarter GDP exceeded all forecasts […] and capped a resilient year for economic growth despite the Fed raising the key rate above 5%,” comments Kathy Bostjancic, chief economist at Nationwide insurance company.
Consumption, the main engine of the American economy, remained solid over the past year, despite purchasing power being eroded on the one hand by inflation and on the other by rising interest rates. .
Because wages have also increased and, since mid-2023, their increase has been stronger than that of prices.
US GDP went on a roller coaster ride in 2020 and 2021, first recording the largest decline in GDP since 1946 (-3.5%) and two months of recession due to COVID-19, then the strongest growth since 1984: +5.9%.
Morale at its highest
“But our work is not done. I will continue to fight to lower costs,” however assured Joe Biden, who hopes to be re-elected to the White House in November.
The Biden administration, taking advantage of the unexpected “soft landing” of the American economy, with lower inflation and a still vigorous job market, continues to praise the effects of its economic policy, “Bidenomics”.
Especially since it now seems very likely that he will find himself facing, once once more, former Republican President Donald Trump, who regularly highlights the good health of the economy when he was in charge, but also household finances, before the surge in prices.
It is Joe Biden who is being blamed by voters for this episode of high inflation. Surveys measuring their confidence, however, seem to be improving, with even an index in mid-January, the highest since the summer of 2021.
Slight recession?
Although the situation has largely improved on the inflation front, the president might nevertheless have to face an economic slowdown, or even a recession, in the middle of the electoral campaign.
Lydia Boussour, economist for Ernst and Young, is counting on “a soft landing”, although with “a probability of recession of around 35%”.
Kathy Bostjancic anticipates “a significant slowdown in economic activity in 2024”, with even “a slight recession by the middle of the year”.
The American central bank (Fed) is expected to lower its rates in 2024, which will make credit more affordable for households and restore their purchasing power.
To curb high inflation, which in June 2022 had reached a level not seen since the early 1980s, 9.1% over one year, the Fed in fact raised its rates eleven times between March 2022 and July 2023.
Inflation has now slowed, to 3.4% year-on-year in December, according to the CPI index.
The Fed’s next meeting will be held on Tuesday and Wednesday, and at this point it is expected to keep rates at their current level, between 5.25 and 5.50%.
To watch on video
1706210910
#growth #defies #predictions #accelerates
