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.
Consumers have spent most of their excess savings from the Covid-19 pandemic, and this trend is expected to continue until the third quarter of 2023, potentially leading to a slowdown in economic growth and job market expansion.
Germany's economy stagnated in the second quarter of 2023, but it has officially emerged from the recession; however, the Bundesbank predicts that the economy will continue to stagnate in the third quarter and the IMF forecasts that Germany will be the only major advanced economy to shrink this year.
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 U.S. economy expanded at a 2.1% annual pace in the second quarter, downgraded from the initial estimate of 2.4%, but still demonstrating resilience in the face of higher borrowing costs and inflation concerns.
Consumer spending is driving third-quarter GDP growth, but unsustainable spending habits, tightening lending standards, and the depletion of pandemic savings may lead to a decline in consumer spending in early 2024.
The UK economy has recovered more quickly from the pandemic than previously thought, outperforming Germany and other major Western industrial nations, although it still lags behind the G7 average, and there are concerns about the potential for a recession due to manufacturing struggles, sliding house prices, inflation, and strikes.
Revisions to economic data by the Office for National Statistics (ONS) have revealed that the UK economy was 0.6% larger at the end of 2021 than previously estimated, improving the country's performance relative to its peers in the G7. The revisions also highlight the impact of stockpiling in 2020 and indicate stronger growth in 2021, particularly in sectors such as wholesale trade and health services. However, while the revisions provide a more positive outlook, the UK's economic narrative remains relatively mediocre compared to pre-pandemic levels.
The UK's statistics office has requested earlier access to key economic data in order to provide a more timely and comprehensive picture of the economy, following a recent surprise revision of its estimate of the size of the economy at the end of 2021.
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.
UK gross domestic product (GDP) fell by 0.5% in July, below expectations, with services output being the main drag on the economy, indicating a potential mild recession, and causing investment banks to revise down their growth forecasts; however, some experts still believe that the economy is growing, albeit at a slower pace.
Goldman Sachs and J.P.Morgan have revised their full-year growth forecast for the UK's GDP due to a sharp contraction in the economy in July, with JPM now expecting 0.4% expansion and Goldman Sachs projecting 0.3% growth. Economists warn of the possibility of a recession as poor economic data continues to emerge, and GDP data indicates a weakening economy.
Spain's post-COVID economic growth has exceeded expectations, with GDP rising by 5.8% in 2022 and 6.4% in 2021, higher than previous estimates, due to new economic data and challenges in measuring economic activity during the pandemic, according to the Institute of National Statistics (INE).
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