The US 2% growth trajectory under the lens - 1 July 2024

For the last two years, the strength of the US economy has defied economists’ expectations. The ever-looming threat of recession has never actually materialised. However, as household consumption has declined and the labour market has gradually cooled in recent weeks, there is renewed talk of a US slowdown. But, for now, the United States economy remains robust.

This healthy picture of the US economy seems to be at odds with the apparent high level of interest rates in particular. But the figures speak for themselves. US GDP annual growth forecasts for 2023 and 2024 have been continuously revised upwards since the summer of 2023. Though residential investment has suffered, emphasis has often been placed on the resilience of household consumption.

Since the beginning of June, a decline in household consumption has led to renewed talk of a US slowdown. According to the Federal Reserve Bank of Atlanta’s GDP growth forecast model (nowcast) for the current quarter, household consumption levels fully explain the decrease in nowcast from just under 3% to 2.2% (cf. chart 2). The other forecasting model maintained by the New York Federal Reserve confirms this growth rate of around 2% for both the second and third quarters of 2024.

Despite a series of positive and negative statistics, underlying growth in the US economy appears relatively stable at around 2%. There is no current indication that it will deviate from this trajectory, but household consumption and job creation figures in the coming weeks will tell.

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