Economists this week raised their forecasts for U.S. economic growth through early 2024 and lowered the likelihood of a recession thanks to the resilience of consumer spending, Bloomberg writes.
The US economy is expected to grow 3.5% year-on-year in the third quarter, boosted by a higher outlook for household spending. And although such growth is expected to slow down over the next two quarters, economists remain optimistic and have even raised their estimates for GDP growth.
The strength of the labor market continues to support household spending, despite rising interest rates and inflation. Employment forecasts for next year have been raised, so economists now see an even chance of a recession next year.
For example, economists at ING see strong consumer spending as the key to economic growth: households have sought to maintain their previous lifestyle by using savings and taking out loans, although inflation still erodes purchasing power.
The core personal consumption expenditure price index, which excludes volatile items such as food and energy, is expected to rise 2.6% in 2024.
Rate cuts are also expected to be slower next year, which could be due to strong economic data that will keep rates high for a long time, as well as the recent rise in long-term Treasury yields.
