Despite previous predictions of economic challenges, the US economy exceeded expectations in the final quarter of last year. This was mostly driven by strong household and government expenditures, according to the Commerce Department.
Last year, the International Monetary Fund released figures that suggested that the global economy would continue to face huge pressure and that 2024 could be a challenging year for global economic growth.
However, the world’s largest economy saw a 3.3% annual growth rate in the three months leading to December, a slight decrease from the 4.9% in the previous quarter but significantly surpassing the anticipated 2% predicted by many analysts.
Factors such as savings from the pandemic, a rise in wage growth, and government spending contributed to a 3.1% growth in the US economy compared to the fourth quarter of 2022.
For the entire year of 2023, the economy experienced a 2.5% annual growth rate, up from 1.9% in 2022. These figures conclude a year marked by unexpected economic resilience, despite the US central bank’s substantial increase in borrowing costs and a moderation in inflation.
Recent surveys have indicated an improvement in consumer sentiment, accompanied by a rising stock market, declining petrol prices, and sustained low unemployment.
Despite concerns about rising prices since 2019, the inflation rate eased to 3.4% in December, following a peak of over 9% in 2022.
This is a positive development for US President Joe Biden, who has faced challenges in convincing the public that the economy remains strong after the post-pandemic boom.
During a speech in Wisconsin, he said that the economic resilience is partly down to White House policies, including investments in green energy, infrastructure, and roads. While acknowledging the need for ongoing progress, he expressed satisfaction with the strong growth.
The improved economic scenario has led to speculation on Wall Street that the Federal Reserve, which aggressively raised interest rates to combat inflation, might consider reversing its course. Analysts suggest that the economic performance reported in the Gross Domestic Product (GDP) data will alleviate pressure on the central bank to act swiftly.