The U.S. economy grew at a pace of 3.3% in the last quarter of 2023 — defying analysts’ predictions and setting the year up for a positive trajectory ahead of November’s presidential election.
U.S. federal officials had forecast that the economy would expand around 2% in the last quarter, following accelerated growth of 4.9% in the third quarter. They say the latest figures show the resilience of U.S. consumers — even at a time of heightened inflation.
Everyday Americans are the main drivers of economic growth
While the central bank has attempted to cool inflation with elevated interest rates, the price of essential goods like groceries and gas is still up 3.4% from last year. This hasn’t stopped the average American from spending though. “The consumer has been incredibly resilient and has certainly been stronger than we expected,” one economist at New York Life Investments told The Washington Post, adding that current trends show what a “healthy U.S. economy should look like.” Consistent job growth is driving consumer spending, Bloomberg reported, noting that the total spending on recreation, food, and transport showed the largest increase since the second quarter of 2022.
Republicans need a reality check
Former and current Republican presidential candidates have slammed ‘Bidenomics’ as obsolete – warning Americans of aggressive government spending and the highest interest rates in 20 years. “Fact check: they are wrong,” wrote Gene Marks, a Republican and small-business owner, in The Guardian. An analysis by Heather Long, a columnist at The Washington Post, also showed that state and local government spending and a “boom” in infrastructure building contributed to economic growth — all initiatives put forward by Biden. “I speak to dozens of industry associations each year and here’s what I’m hearing: just about everyone had a good 2023,” Marks argued, citing “strong earnings” from heads of big banks, and the recovery of retailers and restaurants from the pandemic.
The economic vibes are improving — thanks to the stock market
While declining inflation has helped Americans feel more “upbeat” about spending, “the stock market rally that’s pushed share prices to new records has been an equally important factor,” argued Jordan Weissmann, Semafor’s Washington Editor. Research has shown that higher stock prices “brighten consumers’ moods” — at least in the short term. Weissmann wrote that when markets sank in 2022, the share of Americans who felt confident about retirement fell from 40% to 31%. “With consumer prices quieter, and the Fed staying put on rates, the hot market is now turning into the hot story,” he wrote, adding that Joe Biden “better hope the S&P keeps up its run.”