US growth defied forecasts in 2023

The United States once again experienced solid growth in 2023, defying predictions of a recession. The Biden administration takes the opportunity to praise his economic policy and contrast it with Donald Trump, the presumptive Republican nominee in the race for the White House.

American gross domestic product (GDP) expansion accelerated in 2023, to 2.5% against 1.9% the previous year, according to the Commerce Department’s first estimate released on Thursday.

So the world’s largest economy has not experienced the much-anticipated recession.

“Wages, wealth and employment are higher today than before the pandemic,” President Joe Biden said in a press release.

Growth in the fourth quarter alone also bucked the trend, at 3.3% annualized – which compares GDP to the previous quarter and then projects growth at this rate throughout the year.

This is down from 4.9% in the third quarter. But this surprised analysts, who had expected just 2.0%, according to the Market Watch consensus.

“Fourth quarter GDP exceeded all forecasts” (…) and capped a resilient year,” commented Kathy Bostjancic, chief economist at Nationwide Insurance.

Despite declining purchasing power due to inflation on the one hand and rising interest rates on the other, consumption, the main driver of the American economy, remained solid.

Because wages have also risen and, from mid-2023, their rise is stronger than that of prices.

American GDP has been on a roller coaster ride in 2020 and 2021, with the largest GDP decline since 1946 (-3.5%) for the first time and a two-month slowdown due to Covid-19, followed by the strongest growth since 1984 (+5.9%). . .

Morale at its highest

The Biden administration, taking advantage of the unexpected “soft landing” of the American economy, with low inflation and a still job market, continues to extol the effects of its economic policy “Bidenomics”.

Treasury Secretary Janet Yellen stepped up to the plate Thursday, during a speech with a strong campaign overtone: “None” of Joe Biden’s policies are “intended to recreate a past era.”

“This country and the world have changed and we cannot go back,” the minister continued in Chicago (Illinois), referring to the various investment plans adopted by the Democratic president, which include skyrocketing investments in infrastructure, among others. or green industries.

A strong nod to Donald Trump, who regularly accuses his Democratic rival of killing the “American Dream” and promises, as in 2016, to “restore” the country to “its greatness.”

Janet Yellen asserted, “What we need is a new future (…) driven by 21st century industries, and with the middle class at its heart.”

“The (Biden) administration is building the foundation for this future,” she affirmed, “lauding the most equitable economic recovery in the history of the United States.”

Joe Biden scored a welcome victory Wednesday, winning the support of the influential American auto union UAW, which sought votes for him in November.

Probability of recession

The White House host wants to persuade the American middle class, which has been suffering from inflation for two years, to turn away from Donald Trump, who has regularly highlighted the good health of the economy while in office. Orders, but also domestic finances, before the price surge.

Joe Biden is blamed by voters for this episode of high inflation.

Although the situation has largely improved on this front, the President may still face an economic slowdown or even recession in the middle of the election campaign.

Lydia Boussour, an economist at EY Parthenon, is counting on a “soft landing”, albeit “with a recession probability of around 35%”.

The American central bank (Fed) is expected to cut its rates in 2024, making credit more affordable for households and restoring their purchasing power.

However, she should not touch it yet during the next meeting, Tuesday and Wednesday.

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