Late last year, the U.S. economy expanded 3.3% faster than anticipated.

Despite slowing down in the last three months of 2023, the U.S. economy still had a surprisingly good showing because a minor increase in business investment was compensated by a surge in consumer expenditure.  

A decline is anticipated in 2024 as inflation and high interest rates have a greater impact on growth and the post-pandemic consumer boom fades. The Commerce Department said on Wednesday that the country’s gross domestic product, which is the total value of all goods and services produced in the United States, grew at a seasonally adjusted annual rate of 3.3% for the October–December period.

 Although that is less than the third quarter’s explosive increase of 4.9%, it is still far higher than the 2% advance that economists had forecast.

Is spending by consumers increasing?

After rising 3.1% in the third quarter of last year, consumer spending climbed a strong 2.8% in the final quarter. Approximately 70% of economic activity consists of such purchases.

In addition to strong savings and income growth, households have benefited from job gains, which slowed but climbed by a healthy average of 164,000 for the final three months of the year. This year, according to many economists, something has to give.

 Due to rising borrowing costs and inflation, low- and middle-income households have exhausted their financial reserves, accrued record credit card debt, and driven delinquencies to a 13-year high.

What is the likelihood of a recession in 2024?

According to a study this month by Wolters Kluwer Blue Chip Economic Indicators, forecasters now predict that the economy will increase 1.6% this year, up from 1.3% in December and 0.8% as recently as August. The Fed will have accomplished the desired “soft landing” by controlling the economy sufficiently to reduce inflation without starting a recession if that level of growth occurs.

While a decline could be a serious setback, such a result could increase President Joe Biden’s chances of winning reelection in November. According to the experts polled, the likelihood of a downturn in 2024 is 42%, which is still historically high but lower than the 61% in May.

Increases in government expenditure

For the sixth consecutive quarter, government spending increased, rising 3.3% following a 5.8% increase the quarter before. With sweeping federal legislation driving a surge of sustainable energy and infrastructure projects, state and local purchasing grew by 3.7% and federal spending increased by 2.5 percent.

One little advantage for growth is housing.

After declining for nine consecutive quarters, housing construction and renovation saw a small uptick of 1.1%.

Mortgage rates have increased and existing home sales have been slowed by the Federal Reserve’s dramatic interest rate hikes. Many homeowners are choosing not to list their homes for sale in order to avoid having to pay a significantly higher mortgage rate on their next residence.

According to a recent study, most voters believe that the US economy is in bad shape, but they are divided on whether Trump or Harris can improve it.

Voters in the US are still sharply split on whether they want Democrat Kamala Harris or Republican Donald Trump to address important economic challenges.

According to a recent poll, voters are still not entirely sure which candidate—Democrat Kamala Harris or Republican Donald Trump—they prefer to manage important economic concerns, despite Harris receiving marginally higher ratings on topics like middle-class taxes.

In contrast, voters are marginally more likely to support Trump when it comes to tariffs, which the poll characterized as levies on imported goods.

Harris is viewed more favorably by voters than Trump.

Over the past month, voters’ perceptions of Trump and Harris have hardly changed.

Harris is seen negatively by 46% of voters, while around half have a very or somewhat positive impression of her. In the meantime, roughly 4 out of 10 voters think favorably of Trump, while roughly 6 out of 10 think negatively.

Despite two assassination attempts and a felony conviction, Trump’s popularity ratings have remained relatively stable over the past six months.

Voters have a negative outlook on the nation and its economy.

Voters are still generally disillusioned with the status of the economy and the nation’s overall course.

The economy of the country is rated as extremely or moderately poor by about half of voters. Compared to Democrats, Republicans and independents are more likely to have that opinion. However, there are slight indications of progress as compared to an October 2023 AP-NORC poll in which roughly 70% of American adults said that the country’s economy was in poor condition. When nearly eight out of ten Americans characterized the economy as poor in October 2022, the number was even worse.