US economy strong enough to avoid recession, labor market stable

On July 27, the US Congressional Budget Office (CBO) assessed that the world's largest economy will be strong enough to avoid falling into recession, even as higher interest rates and rising unemployment weigh on consumers.

A food stall on the street in New York, USA. (Source: Xinhua)

Gross domestic product (GDP) is expected to grow 0.4% in the second half of this year, before progressing steadily in 2024-2025, according to the CBO.

In addition, inflation in the US is expected to continue to cool down until 2025, while the consumer price index is estimated to increase by 3.3% in the fourth quarter of 2023 compared to the same period last year.

Inflation will moderate to 2.6% in 2024 before moving closer to the Federal Reserve's 2% target by the end of 2025.

Rising unemployment, weaker consumer demand and higher interest rates will all help push inflation lower. So far, a strong labor market and service sector have allowed the U.S. economy to continue expanding, so more economists are pulling back on their recession forecasts.

A survey by the National Association of Business found that economists now believe there is a 50% or lower chance of the US entering a recession in the next 12 months.

Additionally, US consumer spending is expected to decline slightly in the fourth quarter of 2023 due to tighter lending conditions, higher interest rates and lower savings related to the Covid-19 pandemic.

CBO forecasts that spending in the US will increase by 1.1% in 2024.

Source: https://baoquocte.vn/kinh-te-my-du-suc-manh-de-tranh-suy-thoai-thi-truong-lao-dong-ben-vung-236242.html