The world’s largest economy expanded at an annual rate of 3.3% in the last three months of 2023, the Commerce Department reported. This was a decline from the 4.9% of the previous quarter, but much faster than the 2% that many analysts expected.
In 2023, the American economy grew at an annual rate of 2.5%, up from 1.9% in 2022.
This figure concludes a year characterized by unexpected economic resilience, even as the US central bank drastically raised interest rates in an effort to reduce inflation.
The numbers are a blessing for US President Joe Biden, who is running for re-election and has struggled to convince the public that the economy remains healthy as it slows from the post-pandemic boom.
In recent months, surveys have shown an improvement in consumer sentiment regarding the country’s economy. The stock market is up, gas prices are down, and unemployment remains low.
Although the jump in prices since 2019 continues to be a hurdle for voters, the inflation rate has also decreased, falling to 3.4% in December after spiking to over 9% in 2022.
Many economists expected families to cut back on spending as prices eroded their budgets and business activity cooled due to higher interest rates. But this scenario did not materialize, as the high savings accumulated during the pandemic and the increase in wage growth helped keep American spending high.
This positive outlook leads to speculation that the Federal Reserve (Fed), which has sharply raised interest rates to combat inflation, may begin to reverse course.
It remains to be seen what will come out of the Fed’s upcoming meetings.
Source: BBC