Econ high now - GDP Growth

Growth in the US economy continues to come in above expectations, despite elevated interest rates, weakness in other major economies, and the drawdown of excess savings. Although real GDP growth slowed in the first quarter of this year, it is looking increasingly as though policymakers have managed to avoid a recession, all while bringing down inflation closer to the 2% target. Deloitte’s baseline scenario is still positive in the near term. Consumer spending is expected to remain strong for the first half of 2024 due to sustained improvements in the labor market and stable levels of spending by the business and government sectors. These factors are projected to support real GDP growth this year. While Deloitte’s baseline forecast remains hopeful, we have once again included a scenario that is more optimistic than our baseline—one where labor productivity gains surpass baseline expectations, and structural changes to the labor market occur in the longer term. However, economists are often skeptical of embracing pure optimism. We have therefore developed a scenario highlighting the short-to-medium-term downside risks still clouding the outlook. In this scenario, continued geopolitical conflicts and trade actions cause inflation to stay higher for longer, driving the Federal Reserve to hike rates.