US Economy Ends On High As US Heads Into Festive Week
WASHINGTON, DC (IANS) – The US economy ends on a high note with inflation down, the job market up, consumer buying spirited, expectations of good news on housing, and Feds dropping interest rates in the new year, as the democrats end 2023 on a cheerful note.
They enter the election year with high hopes of retaining power for another term for President Joe Biden in the White House.
The merrymaking for the economy started early on Wall Street.
“As 2023 comes to an end, it is increasingly clear that not only did the economy avoid a widely anticipated recession, but it was also a great year for the economy,” Moody’s Analytics Chief Economist Mark Zandi posted on social media.
After the Federal Reserve indicated, it was effectively finished raising interest rates last week, the markets got off to an early start to holiday merrymaking.
The economy was troubled by a 9.1 percent high inflation last year marking it the largest in 41 years to hit Americans and the feds aggressively went on an interest rate hike with successive tranches over 52 weeks to rein in inflation to its desired level of 2 percent but instead managed to stabilize it at 2.7 percent.
The Federal Reserve has now literally ruled out any more cuts keeping it stable and raising hopes of interest rate cut in the New Year basing it on a projected optimism on a cache of reports to come from the US government, media reports said.
Expectations of inflation fell sharply from 4.5 percent a month ago to 2.7 percent now. It is the lowest level since March 2021. Gasoline prices have fallen in recent weeks, nearing or below the $3 a gallon (3.03 liters to a gallon) mark in many states, while incomes are holding up as wages grow at rates above inflation.
That is likely to provide consumers with enough firepower to make it a decent holiday shopping season, media reports said.
“As 2023 comes to an end, it is increasingly clear that not only did the economy avoid a widely anticipated recession, but it was also a great year for the economy. Real GDP is on track to grow a heady 2.5 percent, unemployment has remained below 4 percent, and inflation has quickly receded,” Moody’s Analytics Chief Economist Mark Zandi posted on social media.
While Powell stopped short of saying the Fed might lower rates at his press conference recently declining to be drawn into any commitment, the central bank did upgrade its economic and inflation forecasts for next year and beyond.
Gross domestic product for the fourth quarter was revised upward to 2.6 percent annual growth from 2.1 percent previously, while economic growth in 2024 is forecast at 1.4 percent.