indicatorThe Owl

The seatbelt sign is off

No landing scenario playing out in the U.S.

By Rob Roach, ATB Economics 29 February 2024 1 min read

Released yesterday, the latest report from the U.S. Bureau of Economic Analysis estimates that the country’s real GDP increased at an annual rate of 3.2% in the fourth quarter of 2023.

This is a slight downgrade from the advance estimate of 3.3% released in January, but the story remains the same: U.S. economic growth has been robust in the face of higher interest rates.

Consumers were once again at the centre of the story with consumer spending growing at a 3% annual pace from October through December with exports, government spending, and nonresidential and residential fixed investment also contributing to the positive reading.

Looking at the year as whole, the U.S. economy grew by 2.5% last year, beating the 1.9% increase seen in 2022.

As a result, not only has talk of an imminent hard landing in the U.S. (i.e., a recession) faded into the background, but so has the notion of a soft landing (tepid, but still positive, economic growth).

These scenarios, which seemed like safe bets in the early days of the fight against inflation, have been replaced by what has proven to be no landing at all (i.e., the U.S. economy expanding at a vigorous rate).

There is still a risk that the turbulence caused by high borrowing costs could cause the seatbelt sign to come back on and force a soft or even a hard landing, but the most recent forecast from the International Monetary Fund pegs U.S. GDP growth this year at a solid 2.1%.

Answer to the previous trivia question: According to NASA, the Earth revolves in orbit around the Sun in 365 days, 6 hours, 9 minutes with reference to the stars. The extra hours add up to about an extra day every fourth year and are added back during leap years as February 29th.

Today’s trivia question: What do the month of March and the planet Mars have in common?

The U.S. economy grew by an estimated 2.5% in 2023

The U.S. economy grew by an estimated 2.5% in 2023

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