The US economy is not resilient; though inflation is slowing, any dramatic change or spike will have devastating consequences.
Egan 24 [Matt Egan; CNN reporter covering business, the economy, and financial markets; 7-10-24; CNN; “The US Economy Faces a New Threat”; https://www.cnn.com/2024/07/10/business/economy-inflation-jobs-fed/index.html; accessed 7-25-24]
Of course, the high cost of living remains a major concern for Americans.
Although the rate of inflation has slowed sharply from 9% in June 2022, there is a painful snowballing effect from more than two years of sharp price gains. Americans are paying much more for groceries, rent and insurance than before Covid-19.
And there are still risks on the inflation front.
The war in the Middle East continues, posing a potential threat to energy production in the region. The same is true of the Russia-Ukraine war, where oil refineries deep inside Russia have been hit by drone attacks.
The upcoming US election also creates significant uncertainty — and complications.
Some mainstream economists are concerned that former President Donald Trump’s economic agenda — tax cuts, immigration crackdown and tariff hikes — would “reignite” inflation.
Plus, cutting rates just before the US election could cause the Fed to be “thrown into the political cauldron—a place it doesn’t want to be,” said Zandi, the Moody’s economist.