The US economy has shown surprising resilience in the face of stubborn inflation and still-high interest rates, as discussed by Tom Rafferty, head of global forecasting and economics at EIU, and Steven Leslie, global principal economist, in the June 2024 Global Outlook video. However, the Federal Reserve (Fed) will continue to try to cool the economy and reduce inflation. Despite a current inflation rate above 3%, which is higher than the Fed’s target of 2%, EIU expects US GDP growth to grow by 2.2% this year and by 1.8% in 2025.
According to Steven Leslie, global principal economist at EIU, the Fed’s core forecast is that it will cut rates in September and then again in December this year. However, unforeseen events such as those seen with the covid-19 pandemic or Russia’s invasion of Ukraine could lead to unexpected outcomes. If inflation remains stubbornly high, there is a possibility that the Fed may hold rates throughout the year or even raise them.
The upcoming US elections will also be influenced by the US economic outlook but to a lesser extent than traditionally seen. While Biden’s strong story on economic growth and employment rates may help him secure reelection, inflation and higher prices for basic goods are key factors affecting voter behavior. Additionally, non-economic issues such as culture wars over immigration are becoming increasingly important to voters.
EIU’s Country Analysis service provides unmatched global insights covering political and economic outlooks for nearly 200 countries, enabling organizations to identify potential opportunities and risks in various regions around the world.
