President Joe Biden is focusing on convincing voters that the U.S. economy is strong and healthy, despite inflation concerns. The U.S. gross domestic product outpaced other developed economies by 2.5% in 2023, projecting GDP growth of 2.1% in 2024. The labor market remains strong, with the fastest employment growth seen since July 2023, and the stock market and housing values have made significant gains. Moody’s Chief Economist Mark Zandi describes the U.S. economy as ‘picture perfect’ with nearly ideal fundamentals.
The U.S. economy’s recent success can be attributed to a combination of policy decisions and luck. The government injected approximately $4 trillion in stimulus to support households and businesses during the pandemic. This stimulus played a key role in helping the economy recover better than other countries. The U.S. stimulus package, while supporting the economy, also contributed to a larger budget deficit. The resilience of the labor market, with unemployment rates remaining low, has been a factor in the economy’s continued strength even as interest rates rise.
The U.S. economy’s performance in the face of global crises, such as the conflict in Ukraine, has shown its resilience. The unique debt structures in the U.S., such as the 30-year fixed-rate mortgage, have protected households from spikes in global interest rates. While the U.S. economy has faced challenges, such as inflation ticking back up in recent months, the Federal Reserve remains hawkish on interest rates. There is optimism for the U.S. economy’s recovery, with experts noting that it is on track or above where it was before the pandemic hit.
Federal Reserve Chair Jerome Powell has indicated that it is too soon to determine whether recent inflation readings are more than just a temporary bump. While there may be bumps in the road ahead, experts like economist Joseph Gagnon remain positive about the U.S. economy’s trajectory. Atlanta Federal Reserve President Raphael Bostic expects one rate cut this year, likely in the fourth quarter. As the U.S. economy continues to recover, there is recognition that challenges still exist, but overall, the outlook remains optimistic for the future.
