Is the U.S. Economy Really Growing by 5.8%? Not So Fast

The US economy has exceeded the Federal Reserve's estimate of its growth potential in recent years, with growth averaging 3% under President Joe Biden, but concerns about rising public debt and inflation, as well as the Fed's efforts to control them, may lead to slower growth in the future and potentially a recession. However, there are hints of improving productivity that could support continued economic growth.

The U.S. economy and markets seem to be in good shape for now, but there are concerns about the potential for problems in the future due to factors such as rising interest rates, supply and labor shocks, and political uncertainties.

The U.S. economy continues to grow above-trend, consumer spending remains strong, and the labor market is tight; however, there are concerns about inflation and rising interest rates which could impact the economy and consumer balance sheets, leading to a gradual softening of the labor market.

U.S. economic growth may be accelerating in the second half of 2023, defying earlier recession forecasts and leading to a repricing of long-term inflation and interest rate assumptions.

The majority of economists polled by Reuters predict that the U.S. Federal Reserve will not raise interest rates again, and they expect the central bank to wait until at least the end of March before cutting them, as the probability of a recession within a year falls to its lowest level since September 2022.

The Federal Reserve faces new questions as the U.S. economy continues to perform well despite high interest rates, prompting economists to believe a "soft landing" is possible, with optimism rising for an acceleration of growth and a more sustainable post-pandemic economy.

The US economy continues to perform well despite the Federal Reserve's interest rate hikes, leading to questions about whether rates need to be higher and more prolonged to cool inflation and slow growth.

Despite the optimism from some economists and Wall Street experts, economist Oren Klachkin believes that elevated interest rates, restrictive Federal Reserve policy, and tight lending standards will lead to a mild recession in late 2023 due to decreased consumer spending and slow hiring, although he acknowledges that the definition of a recession may not be met due to some industries thriving while others struggle.

The US Federal Reserve must consider the possibility of the economy reaccelerating rather than slowing, which could have implications for its inflation fight, according to Richmond Fed President Thomas Barkin. He noted that retail sales were stronger than expected and consumer confidence is rising, potentially leading to higher inflation and a need for further tightening of monetary policy.

U.S. economic growth, outpacing other countries, may pose global risks if the Federal Reserve is forced to raise interest rates higher than expected, potentially leading to financial tightening and ripple effects in emerging markets.

The US economy is expected to slow in the coming months due to the Federal Reserve's efforts to combat inflation, which may lead to softer consumer spending and sideways movement in the stock market for the rest of the year, according to experts. Additionally, the resumption of student loan payments in October and the American consumer's credit card debt could further dampen consumer spending. Meanwhile, Germany's economy is facing a recession, with falling output and sticky inflation contributing to its contraction this year, making it the only advanced economy to shrink.

The US economy grew at a slower pace in the second quarter, but still showed more strength than expected, with GDP revised down to 2.1% from an initial 2.4%; however, forecasts indicate a robust reading in the third quarter of 2.5% or higher, despite concerns of a potential recession.

The global economy is expected to slow down due to persistently high inflation, higher interest rates, China's slowing growth, and financial system stresses, according to Moody's Investors Service, although there may be pockets of resilience in markets like India and Indonesia.

The U.S. economy is defying expectations with continued growth, falling inflation, and a strong stock market; however, there is uncertainty about the near-term outlook and it depends on the economy's future course and the actions of the Federal Reserve.

Stock investors have been reacting positively to "bad economic news" as it may imply a slowdown in the economy and a potential halt to interest rate hikes by the Federal Reserve, however, for this trend to change, economic data would have to be much worse than it is currently.

The U.S. is currently experiencing a prolonged high inflation cycle that is causing significant damage to the purchasing power of the currency, and the recent lower inflation rate is misleading as it ignores the accumulated harm; in order to combat this cycle, the Federal Reserve needs to raise interest rates higher than the inflation rate and reverse its bond purchases.

U.S. economic growth was modest in July and August, with slowing inflation and a cooling labor market, indicating that the Federal Reserve may be close to finishing its interest rate increases.

The Federal Reserve may be the cause of rising housing prices and the low supply of existing homes, which could lead to increased inflation and concerns about the Fed's response to the cost of living. Lowering interest rates and unlocking the supply of homes could help alleviate the issue.

Deutsche Bank strategists warn that the U.S. economy has a greater chance of entering a recession within the next year due to high inflation and the Federal Reserve's aggressive interest rate hike campaign.

The U.S. economy is expected to expand at a 2.2% annual rate in the current quarter, according to a real-time estimate from the New York Federal Reserve, which is lower than the Atlanta Fed's estimate of 5.6% growth; the strength of the economy will impact the Federal Reserve's decision on interest rates and inflation.

The US economy is facing a looming recession, with weakness in certain sectors, but investors should not expect a significant number of interest-rate cuts next year, according to Liz Ann Sonders, the chief investment strategist at Charles Schwab. She points out that leading indicators have severely deteriorated, indicating trouble ahead, and predicts a full-blown recession as the most likely outcome. Despite this, the stock market has been defying rate increases and performing well.

The Wall Street Journal reports a notable shift in the stance of Federal Reserve officials regarding interest rates, with some officials now seeing risks as more balanced due to easing inflation and a less overheated labor market, which could impact the timing of future rate hikes. In other news, consumer credit growth slows in July, China and Japan reduce holdings of U.S. Treasury securities to record lows, and Russia's annual inflation rate reached 5.2% in August 2023.

The Federal Reserve is expected to cut interest rates by about one percentage point next year as economic growth slows and unemployment rises, according to chief economists at major North American banks.

The Federal Reserve is unlikely to panic over the recent surge in consumer prices, driven by a rise in fuel costs, as it considers further interest rate hikes, but if the rate hikes weaken the job market it could have negative consequences for consumers and President Biden ahead of the 2024 election.

Stronger-than-expected U.S. economic data, including a rise in producer prices and retail sales, has sparked concerns about sticky inflation and has reinforced the belief that the Federal Reserve will keep interest rates higher for longer.

The stock market is currently stagnant and the key question is when the Federal Reserve will start cutting interest rates, as the market struggles when the Fed tightens monetary policy.

Leading market experts are raising concerns about the growing US debt, warning that it will lead to higher interest rates and potential economic repercussions as federal deficits increase and US debt supply continues to grow.

Goldman Sachs strategists predict that the Federal Reserve is unlikely to raise interest rates at its upcoming meeting, but expect the central bank to increase its economic growth projections and make slight adjustments to its interest rate projections.

Despite elevated inflation, the Federal Reserve is not expected to lower interest rates soon, causing the Consumer Price Index to rise significantly and impacting mortgage rates and home prices.

Investors will closely scrutinize the Federal Reserve's updated economic forecasts, particularly its interest rate outlook, to determine the market's next big story.

The Federal Reserve is expected to keep interest rates steady and signal that it is done raising rates for this economic cycle, as the bond market indicates that inflation trends are moving in the right direction.