U.S. Economy Thrives: 6% Growth, Inflation Down, and Unemployment at Four-Month Low
October 2, 2024The U.S. economy has demonstrated resilience, growing by 6% over the past two years while inflation has decreased, defying earlier recession predictions.
Recent economic reports reveal continued expansion, with unemployment claims at a four-month low and a rise in retail spending.
In September, the savings rate improved to 4.8%, indicating that consumers are saving a larger portion of their incomes.
Despite a modest 0.2% increase in Americans' incomes and spending last month, upward revisions suggest a healthier financial outlook than previously believed.
Richmond Fed President Tom Barkin emphasizes a cautious approach to interest rate cuts to ensure ongoing declines in inflation.
The Federal Reserve's preferred measure of consumer prices, the personal consumption expenditures (PCE) price index, rose by only 2.2% over the past year, nearing the Fed's 2% target.
Year-over-year inflation has decreased to 2.2%, down from 2.5% in July, indicating a positive trend in price stability.
Core inflation, which excludes food and energy, rose by just 0.1% from July to August, marking the fourth consecutive month of increases below an annual rate of 2%.
The Federal Reserve's preferred inflation measure shows that price pressures are easing, with only a 0.1% rise in prices from July to August.
Grocery costs remained stable last month, while energy costs fell by 0.8%, largely due to declining gasoline prices.
The Federal Reserve recently cut its benchmark interest rate by half a point and anticipates further cuts in November and December, with additional reductions expected in 2025 and 2026.
A study from the Peterson Institute for International Economics warns that potential policies from Donald Trump could increase inflation by 4 to 7 percentage points, raising rates to between 6% and 9%.
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