3.1%: The US Economy Has Beaten the Odds in 2023. Will the Fed Win Its Soft Landing Bet?
America tops the growth rankings for developed countries in 2023. Impressive!
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You're going to think that this newsletter is dedicated solely to America because today I'm going to talk to you about another strong figure linked to the American economy.
However, it's not my aim to talk only about America, but the economic publications of the last few days, which provide figures for Q4 2023 and the whole of 2023 in America, oblige me to react.
The figure that particularly caught my attention yesterday was 3.3%.
3.3% is the figure for US growth in Q4 2023.
After a Q3 2024 growth rate of 4.9% in America, the consensus was around 2% for Q4 2023. The American economy has therefore far exceeded all expectations, resulting in growth for the full year 2023 of 3.1% in America:
These figures are significant, coming as they do just a few days after the World Bank announced lower growth forecasts for 2024, calling it a lost decade for the world.
The American economy continues to display insolent success. It is quite simply the strongest of all developed countries in 2023.
All those who feared a recession in America at the start of 2024 will have to wait again. Not only is there still no recession, but growth accelerated towards the end of 2023, with the 3.3% rate I've just mentioned, far exceeding all expectations.
Once again, America has beaten the odds to top the growth league table among developed countries.
Yesterday, I gave you the main reason for this insolent success of the American economy in 2023: American household consumption was the main driver of growth.
American consumers continued to defy the Fed and Jerome Powell. Nothing could stop them from consuming. Despite rising interest rates and pressure on purchasing power, they remained confident.
The driving force behind America's continuing strong household consumption is the combination of full employment and rising wages.
Boosted by US government spending, and in particular Joe Biden's Inflation Reduction Act, the famous stimulus plan to encourage relocation to America, investment has also been on the rise.
At the start of 2024, America is in an ideal scenario.
This ideal scenario is one of steady growth and falling inflation. Inflation may well rebound for another two or three months. But everyone thinks it will be temporary from now on.
The signs of a slowdown are there for all to see, but no economist dares risk predicting a recession in America, despite the clouds that are beginning to gather. Having been proven wrong, many prefer to remain measured in the face of the extraordinary resilience of the American economy.
As I mentioned in yesterday's article focusing on American consumers, what fascinates me most about America is its confidence in the future. It's what drives consumers to continue consuming. And this confidence in America has risen by 29% in 2 months, the most since 1991.
Beyond consumer confidence, it's Americans' general confidence in the future that fascinates. Especially if you're European...
Behind this confidence in America are the countless successes to be credited to the country headed by Joe Biden in 2023. America is the world's leading economic power, and the threat from China is receding ever further in the face of the crisis currently affecting the country led by Xi Jinping.
America has more than ever strengthened its position as the world's leading military power, with Europe taking refuge under its wing in the face of the danger posed by Vladimir Putin's Russia. On the commercial military front too, with an explosion in arms and defense sales feeding America's powerful military-industrial complex.
The most critical of critics will raise a major objection: the American model still leaves part of the population by the wayside. The poverty rate is worryingly high, as is unemployment among America's most disadvantaged groups. Inequality is on the rise, while social misery is frightening to behold in America.
That's the paradox of this country, and it's one of the challenges America will have to face in the years to come. But that wasn't the subject of this article. I'll probably come back to it in the future.
In the meantime, it will be interesting to see what happens next for the American economy in 2024, when the Fed may well succeed in its bid for a soft landing...
Are You Losing Money If You Put It Into a Bank?
Never underestimate the power of debt to fool people into believing they can spend their way to prosperity.
Love your Bitcoin content but this is off the mark. Government is adding to the debt at record pace to finance growth and crowding out the productive economy in the process. Amazing what the world’s money printer can buy. You should know better.
Credit Joe Biden... enough gaslighting please.
All of these optimistic prognostications and statistics are based on statements and data generated by an organization notorious for speaking half-truths. One cannot infer proper conclusions from flawed data.