In the context of high inflation, rising interest rates, fiscal dysfunction and geopolitical conflict, many dismal scientists predicted that the US economy would finish 2023 in stagnation or even a recession. Yet the US economy has proven to be remarkably resilient.
In November and December 2023, the US consumer price index rose by 0.1 per cent and 0.3 per cent, respectively. Relatively good news on inflation has prompted the Federal Reserve at its last meeting to keep interest rates unchanged and pointed to possible rate cuts in 2024. Throughout 2023, the unemployment rate remained at historic lows and the labour participation rate increased over the year. US GDP performance beat expectations with robust 4.9 per cent and 3.3 per cent annualised growth rates in the third and fourth quarters of 2023. The S&P500 stock index rose 24 per cent over the year and the US dollar remained strong.
Unsurprisingly, most forecasters are revising their estimates for 2024. While they still anticipate slow growth in 2024 — the International Monetary Fund expects a mere 1.5 per cent expansion — it is difficult to find anyone that still predicts a recession. The country’s policymakers may well have been able to engineer one of the rarest of all macroeconomic feats — the ‘soft landing’.
Much of this is good news for economies in the Asia Pacific. The United States is one of the largest foreign investors in the region. It accounts for about 15 per…
