25 January 2024
If you are covering the latest US GDP growth figures, please find below a comment from Lindsay James, investment strategist at Quilter Investors:
“US growth may be slowing, but it remains anything but sluggish. Today’s fourth quarter growth number shows that the US economy is not grinding to a halt and any recessionary fears remain on hold for the foreseeable future. That would normally be considered very good news, but the market desires rate cuts and it wants them sooner rather than later. With such robust growth continuing to be a feature of the US economy, all eyes will turn to inflation data out later this week to see if last month's disappointing CPI release was a blip. With today’s data showing growth in real disposable incomes of 2.5% in Q4, up from 0.3% in Q3, it’s clear that the Federal Reserve are under less pressure to be mindful of risk to growth and likely to be fully focussed on price stability, potentially delaying timing of the first cut further.
“This puts it on a collision course for the US election. Jerome Powell will be determined not to be seen to meddle in the outcome, however, with Donald Trump in pole position for the Republican nomination, and his expected campaign antics, it might not be long until Powell catches the ire of the former President once again.
“For now, however, the picture remains very uncertain as we hurtle towards the election. Forecasts by economists for US GDP growth in 2024 currently range from 0-3.1%, with the range of expectations for inflation only marginally narrower and wildly different to expectations in early 2023, showing how uncertain the outlook for 2024 remains.”
