The United States remains the most stable economy in the world, with a much better-than-expected GDP growth last year.
The US economy continues to power through high interest rates, with GDP data for the last quarter doubling market expectations. The American economy remains the world’s most stable, despite years of constant crisis and an upcoming national election.
GPD in the United States grew 3.3% in the last quarter of 2023. Wall Street had priced in a meager 1.5% growth, meaning that the US economy more than doubled expectations. For the whole year of 2023, the American GDP increased by 2.4%, again beating the initial forecast of 1.9% growth.
Indeed, markets and analysts all believed a recession was certain in 2023, even for just a few quarters. The quick increase in interest rates by the Federal Reserve, reaching 5.25 points, was pointed as the main culprit for the upcoming crisis.
Last March, the sudden collapse of three major US banks in less than 90 days fueled these fears. Even the Federal Reserve considered a recession inevitable but went ahead with rate hikes to battle inflation.
With the beginning of 2024, the battle against inflation is also almost over. Consumer prices are coming down to the 2% target level, with core inflation falling 1.8% since December 2022.
What to expect for 2024
The Federal Reserve is now looking ahead. With recession almost certainly avoided, the Fed is considering when to start with rate cuts. According to Fed members and analysts, as high as 5 rate cuts may be implemented already in 2024.
But markets should not feel too optimistic about the future. 2024 is an election year in the United States, meaning that even a slight (albeit unlikely) recession could oust Joe Biden from the White House.
Furthermore, the global geopolitical scenario is too unstable to make any calls. China is on a war footing against Taiwan, even though it’s struggling with its internal issues. The wars in Ukraine and the Middle East continue without an end in sight, and could still disrupt global supply chains in critical economic sectors.
2024 will also be an election year for many key international players. For example, whoever comes next in the European Union, the UK, and India will certainly change the global equilibrium.
So far, the United States managed the world crises wisely. They are keeping the Middle Eastern war localized, and the Biden administration is lobbying to continue supporting Ukraine.
However, a Trump victory could pose a serious threat to the international balance.
