US Economy on the Rise: Jobs, Growth, and Inflation
After a period of significant inflation and economic unease, the U.S. economy is showing signs of resilience and growth. Inflation has cooled down considerably, wages are rising, and unemployment remains at a 50-year low. This positive momentum extends to trade and the stock market, with both experiencing notable improvements. However, a shadow of concern lingers regarding the potential role of corporate profits in fueling inflation. Here are the key points:
The GDP reached $27.4 trillion in 2023, with an annual real GDP growth rate of 4.9% in Q3 2023, up from 2.1% in Q2. This increase was driven by consumer spending, investment, government spending, and exports.
Inflation remains at 3.1% year-over-year as of January 2024, though down from the peak of 9.1% in June 2022. Shelter, food prices, and gasoline were major contributors to inflation in 2023.
Corporate profits are at record highs, with some studies suggesting they contributed significantly to inflation in 2023:
A report by Groundwork Collaborative found corporate profits drove 53% of inflation from April to September 2023, up from just 11% in the 40 years prior to the pandemic.
Economist Isabella Weber argues corporations are keeping prices high simply "because they can," even as supply chain pressures ease.
Average hourly earnings rose 4% year-over-year in December 2023.
The unemployment rate is at 50-year low of under 4%, with more open jobs than unemployed workers throughout 2023.
The trade deficit narrowed by 22% in 2023 to $773.4 billion, with the U.S. importing more from Mexico than China for the first time in 20 years.
Despite continued economic growth, inflation remains a challenge. Some analyses point to record corporate profits as a contributing factor. This keeps policymakers and consumers on edge, as they navigate rising prices and plan for the future.
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