An in-depth look at the US economy
Image: Aaron Schwartz/Zuma Press
In his annual address at the Federal Reserve’s summer gathering in Jackson Hole on Friday, Fed Chair Jerome Powell said US inflation is still too high for the central bank’s liking, and suggested additional interest rate hikes could be seen in the coming months.
- He also said the Fed plans to keep baseline interest rates elevated for an extended period of time, until inflation is closer to the central bank’s long-term goal of 2%.
Powell’s comments come as the US economy has largely defied predictions that growth would cool over the past few months:
- GDP increased at a faster-than-expected pace in Q2. The US economy grew at an annualized pace of 2.4% last quarter, per federal data published late last month, higher than the 1.8% pace economists surveyed by Bloomberg had forecast.
- Consumers are proving more resilient than projected. The Commerce Department’s July retail sales report showed an overall increase of 0.7%, nearly double what economists had predicted.
- Job growth is slowing, but the labor market is still tight. The US economy added 187,000 jobs last month, slightly under analysts’ estimates of 200,000, while the unemployment rate fell to 3.5%. There are currently 1.6 job openings for every unemployed American, per the most recent federal data.
✋ Yes, but… If the US economy were an airplane, the “Fasten Seatbelt” light would be on – because it seems more turbulence is ahead. Core inflation remains relatively high (4.7% last month), meaning consumers are still seeing elevated prices for transportation, medical services, housing, and other essential products.
And, since it typically takes at least 12 months before interest-rate hikes have their full impact on the US economy, consumers are also starting to feel the pain of higher rates for mortgages, loans, credit cards, etc.
- Defaults on both credit cards and auto loans rose past pre-pandemic levels in Q2 2023, per a Fed report this month.
🎓 Another point not in the future economy’s favor: The upcoming restart on student-loan payments is projected to have a ripple effect across the US economy, as billions of dollars each month start flowing towards student debt and away from retailers, credit card balances, medical debt, and other sectors.
đź“Š Flash poll: To all working professionals: would you consider the growth outlook in your industry/sector of the economy to be positive or negative over the next 12 months?
See a 360° view of what media pundits are saying →
Sprinkles from the Left
- Some commentators argue that the US economy has performed surprisingly well in recent months and may end up achieving what nearly every expert thought was impossible – bringing down inflation without triggering mass layoffs and a downturn.
- Others contend that the economy actually isn’t performing very well for everyday Americans, and US policymakers should reexamine their priorities to ensure the average worker is seeing the benefits of overall economic growth.
- “The U.S. economy is humming. It’s time to celebrate — and aim higher.” –WaPo Editorial Board
- “US economy racked up good numbers, but it’s not delivering for many Americans” –Chris Tomlinson, Houston Chronicle
- “The US Economy Is Great. Stop Worrying About It.” –Tyler Cowen, Bloomberg
Sprinkles from the Right
- Some commentators argue that the average American is far worse off today than a few years ago, thanks in large part to Democratic policies that have contributed to historically high levels of inflation for consumers.
- Others contend that America’s future growth prospects are looking poor due to rising long-term interest rates, which can be partially blamed on the White House’s economic policies which involve enormous new government borrowing.
- “No Relief from “Bidenomics”” –Sen. John Thune (R-SD)
- “The Return of High Interest Rates” –WSJ Editorial Board
- “The Economy That Republicans Don’t Want to Talk About” –Jim Geraghty, National Review
Share this!
Recent Discussion stories
Discussion
  | August 25, 2023A closer look at remote work in America
🏡🏢 More than 3 yrs after the pandemic forced many employees to work from home, the policy is still popular in many sectors of the economy. But is it the best working setup for everyone involved?
Discussion
  | August 23, 2023The first debate of the 2024 presidential election is here
🗳️🗣️ At 9 pm ET tonight, eight of the top Republican presidential candidates will gather onstage in Milwaukee for the inaugural debate of the 2024 election cycle →
Discussion
  | August 21, 2023Could the Moon’s “Ice Rush” lead to a future space-based conflict?
🌕🧊 Several countries, including the US, Russia, and India, are rushing to scope out the Moon’s south pole as a place for future lunar bases. The key driver? It’s filled with ice.
You've made it this far...
Let's make our relationship official, no 💍 or elaborate proposal required. Learn and stay entertained, for free.👇
All of our news is 100% free and you can unsubscribe anytime; the quiz takes ~10 seconds to complete