Sluggish economic growth in US to continue till end of 2023: Report

New Delhi [India], August 24 (ANI): The ongoing sluggish economic growth in the US is expected to continue through the end of 2023 as moderate gains in consumer spending and government purchases are offset by a significant decline in construction activities, global business intelligence solution firm S&P Global Market Intelligence said in an analysis.
The GDP growth in the US is projected to slow from 5.7 per cent in 2021 to 1.5 per cent in 2022 and 1.0 per cent in 2023 before picking up to 1.7 per cent in 2024.
“With growth falling short of potential, the US unemployment rate will likely rise from 3.5 per cent in July to 4.8 per cent in mid-2024,” it said.
On recession in the US, it said although real GDP decreased slightly in the first two quarters of 2022 but “do not call it a recession.”
Since December 2021, the monthly indicators used by the National Bureau of Economic Research in dating business cycles, the analysis said, have posted solid gains, including employment, industrial production, real personal income excluding transfer payments, and real retail sales.
While consumer inflation in the US is currently significantly high, tightening financial conditions, it said, are necessary to cool excess demand and help bring down inflation, though the degree of tightening will depend on local conditions.
“In the United States, the federal funds rate is expected to rise to a range of 3.50-3.75 per cent in December 2022 and stay there for a full year,” it added.
Meanwhile, consumer inflation or Consumer Price Index in the US has moderated to 8.5 per cent in July compared to a year ago period, US Bureau of Labor Statistics data showed. The inflation print for the month was comparatively down from a four-decade high of 9.1 per cent in June.
In the backdrop of an over four-decade high inflation, the US Federal Open Market Committee in the July meeting raised its key policy interest rate by 75 basis points to 2.25-2.50 per cent, anticipating the increase in the interest rates will be “appropriate”.
In June too, the US Federal Reserve raised the interest rate by 75 basis points, which was the steepest hike since 1994. Hiking interest rates typically cool demand in the economy, thereby putting a brake on the inflation rate. (ANI)