The recent debate between President Joe Biden and former President Donald Trump shed light on the state of the US economy, which holds significant influence on the global economic stage.
As the world's largest economy, the US has been performing well, with a solid Gross Domestic Product (GDP) growth of 3% in 2023, albeit showing a slight slowdown in the first quarter of the year. The unemployment rate stands at a low 4%, and while new applications for unemployment benefits have seen a slight uptick in recent weeks, they remain close to pre-pandemic levels.
Consumer spending, a key driver of the US economy, has seen a cooling trend in recent months but continues to show healthy levels of activity. This sustained spending by American consumers has contributed to the International Monetary Fund revising its global growth estimate upwards, citing the strong performance of the US economy.
However, the economy faces challenges in the form of persistently high inflation, which exceeds the Federal Reserve's target of 2%. The current annual inflation rate, as measured by the Consumer Price Index, stands at 3.3%. To combat inflation, the Federal Reserve has raised interest rates significantly since March 2022, with rates now at a 23-year high. Fed officials have indicated a plan to cut rates only once this year, as they navigate the delicate balance between controlling inflation and supporting economic growth.
These economic headwinds, particularly inflation and high-interest rates, are key factors influencing the economic landscape in the US, impacting both businesses and consumers alike.
