The US is up 2.1% in 2022, but the shadow of recession does not leave them

From 2021 United States of America showed an increase economy; However, this year 2023 will be an exception, given the uncertainty that this world power will fall into a recession despite its growth of 2.1% last year.

In 2021, according to data from the Department of Commerce, which keeps growth data, the country saw its biggest annual economic growth since 1984: 5.9%. Although this is also a statistical effect, since the comparison was based on 2020, when the pandemic caused the most retraction GDP since 1946 (-3.5%) and two months recession.

Growth continued into 2022, and in the fourth quarter of this year, the US economy grew 2.9% on a yearly basis, a measure used in United States of America which predicts 12-month growth based on prevailing conditions at the time of measurement.

GDP performed better than expected, summed up Rubila Farooqi, chief economist at HFE.

US GDP has already rebounded in the annual forecast in the third quarter (3.2%) after two quarters of contraction.

While technically some consider the two quarters of recession to be a recession, many, from the government to many economists, also consider the strength of economic growth. labor marketamong other factors, and point out that there was no recession in the US last year.

Consumption rises despite high interest rates

Consumption, the engine of growth in the United States, remained strong at the end of 2022 despite rate hikes enacted by the Federal Reserve to try to cool the economy and ease pressure on prices.

Higher Rates Mean More Costs creditand hence consumption and investment.

Although consumption was, “at the end of the fourth quarter” of 2022, “we saw weakness at the economic level,” Gregory Dako, chief economist at EY Parthenon, told AFP, referring to retail sales and industrial production in particular.

In addition, “the labor market, which is relatively strong, is weakening,” he added.

Consumers experience a decline in their purchasing power due to inflation and rising credit costs.

But even with higher-priced credit, orders for durable goods, including purchases for large enterprises, rose sharply in December from November by 5.6%.

And the hiring difficulty phenomenon persists across companies in general, although some sectors such as tech, which have been recruiting en masse during the pandemic, have nonetheless laid off thousands of people in recent weeks.

– 2023, a year of uncertainty –

The specter of a recession in 2023 has many wondering if the economy will grow or not.

“In 2023, the US economy will face a mild recession driven by the tight monetary policy of the Fed,” Ryan Sweet, chief economist at Oxford Economics, predicted in a research note in which he forecast a contraction in the second quarter.

“At the moment, economic indicators are more indicative of a recession that would start to form at the beginning of the year, even in December-January,” and, possibly, with the destruction of jobs from January, Dako notes for his part. .

Dako acknowledges that a special and unique factor in this possibly recessive cycle is the strength of the labor market, with a record low unemployment rate of 3.5%.

“This is a key element supporting the consumer (…) backbone of the US economy,” he added.

Given these data, many economists believe that growth will continue.

“The main protective shield that everyone points to is the labor market,” which, in addition to the savings accumulated during the pandemic — when spending fell and federal assistance to households was in the millions — allows Americans to continue to consume, says economist Matt Kolyar. , from Moody’s.

Kolyar expects weak growth and will need to “tune the eye to tell if it’s a recession or not,” with GDP growth projected at 1% a year. (AFP)