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“Economic Challenges Towards US Economy” This matter shook the whole world. In 2023, U.S. economic forecasters say economic growth is slowing and heading for a recession. Of course, there was a logical reason for that prediction. But in reality, the country’s economy continued to grow at two percent. Even inflation has come down.
In such a situation, many analysts have turned away in despair. This time, their forecast says that the United States will be able to avoid recession in 2024. Moreover, inflation will also be under their control.
However, the US economy may face three risks in 2024. First, there is always a lag between a country’s central bank interest rate hike and its impact. In 2023, consumers and companies had savings, limiting their financing needs. They will have a ‘thinner buffer’ in 2024 and their exposure will grow more.
Second, although the Federal Reserve has finished raising interest rates. But the real rate will become progressively more restrictive, as inflation declines.
Third, the unemployment rate is rising and the economy is slowing again.
Among these trends, the biggest question is the US presidential election. Meanwhile, US voters have expressed dissatisfaction with current economic policies. Naturally, US President Joe Biden and the Democrats will be disappointed.
Fewer than four in 10 adults support Biden’s economic actions. However, his administration has brought forth several successes. They are to avoid recession, keep the unemployment rate low, and control inflation. At the same time, the Biden government also passed the law to invest in green energy.
However, Americans are not satisfied with these successes. Because commodity prices are still up nearly 20 percent since Biden took office.
The American economy is not immune to the pressure ahead. Rising food and petrol prices in the country are emptying people’s pockets. Last April, consumer prices were 8.3 percent higher than a year ago. Even excluding food and fuel prices, annual inflation is 6.2 percent. As long as the effects of the Ukraine-Russia war and China’s zero-covid policy persist, the supply shortage will worsen. The American labor market is pretty hot. Last March, there were about two job openings for every unemployed worker. That’s the most since 1950 when data were first collected. Global investment firm Goldman Sachs’ wage growth rate is 5.5 percent. They say that even if the price of products increases, the companies will not be able to take the issue of increasing wages.
The Federal Reserve System (Fed) is the central banking system of the United States. The company is promising to pour water on the fire. Investors expect interest rates to rise to more than 2.5 percent by the end of 2022. The central bank is overcoming its minor problems. They say it can reach its 2 percent inflation target without triggering a recession. But history says that working to control inflation will shrink the economy. Since 1955, the rate has risen as fast as this year in seven economic cycles. Six of these cycles had recessions within a year and a half. The exception was the mid-1990s when inflation was lower and the labor market was more balanced. Jamie Dimon, the head of the US multinational banking and holding company JP Morgan Chase, warned America on June 1 that a “hurricane” is coming to the economy.
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