US economy grows stronger than all forecasts, hopes for household spending

On January 25th, the Department of Labor released a report showing that in the last three months of 2023, the US economy grew at a rate of 3.3% thanks to a 2.5% increase in household spending.

Consumer spending will drive US economic growth in 2024. (Source: Medium)

This growth rate is stronger than all previous forecasts. The world 's largest economy is projected to grow by 2.5% for the whole of 2023.

Economists predict that consumer spending will continue to drive the economy in 2024.

Another year of solid growth could help the economy achieve a soft landing, and the Federal Reserve's policy actions could bring inflation back to its 2% target without triggering a recession.

This outlook will help keep the economy on track and grow even without support from other growth sources such as business investment, housing construction, or foreign trade.

While declining inflation is beginning to yield results, the strength of the labor market is also a key factor in the consumer-centric outlook for 2024. Weekly unemployment insurance claims remain low, suggesting companies are retaining employees.

However, hiring has slowed. The combination of falling inflation and a weakening job market has led investors to bet that the Fed will begin cutting interest rates as early as March 2024. Lower borrowing costs would support housing investment.

Business investment may remain subdued as companies grapple with a range of concerns amid weak foreign growth, uncertainty ahead of the November election, and questions about the sustainability of domestic demand.

Nevertheless, initial indications from the latest reports suggest that consumers remain very resilient.

According to some economists, the combination of household spending and government spending will continue to offset the lackluster investment figures.

Source: https://baoquocte.vn/kinh-te-my-tang-truong-manh-hon-tat-ca-cac-du-bao-ky-vong-vao-chi-tieu-ho-gia-dinh-258790.html