Kavan Choksi Business Consultant Sheds Light on the Falling Inflation and Rising Growth in the United States

Kavan Choksi Business Consultant Sheds Light on the Falling Inflation and Rising Growth in the United States

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The United States has managed to power through a pandemic, the highest inflation in 40 years, as well as fallout from two foreign wars since 2020. As per Kavan Choksi Business Consultant,subsequent to witnessing faster growth in 2023 than in 2022, the US economy is also quashing fears of a recession while providing lessons for future crisis-fighting. The annual inflation over the second half of 2023 fell back to the Federal Reserve’s 2% target. Moreover, the economy also grew by 3.1 % over the past 12 months. Owing to these factors, the Commerce Department report showed that the United States appears to have achieved an economic soft landing.

Kavan Choksi Business Consultant briefly discusses the falling inflation and rising growth in the US

The recovery of the United States economy from the Covid-19 pandemic challenged discerning long standing beliefs, which include the idea of an inverse relationship between unemployment and inflation. The success of the government in reviving the economy also suggests new approaches to future downturns. The approach relies significantly on the power of the purse of the government, and less on the Federal Reserve’s control of the cost of credit.

Consumer spending has played a huge role in driving the US economy. Real consumption in the country rose by 0.5% in December 2023, its fastest pace since last January. A surge has been seen in home sales as well.

The $28 trillion United States economy weathered several shocks over the past year and returned to the growth path it was on before the pandemic. The size of the economy, adjusted for inflation, managed to regain its pre-pandemic peak in early 2021. Through the end of September, it was more than 7 % larger than before the pandemic. As per British Parliament data, this was more than twice of Japan’s gain, and much higher than the 0.3% increase experienced in Germany. For a large number of Americans, the growth paid off in the form of an increase in wages. Over the four years through September of 2023, the US wages grew 2.8 % after inflation. On the other hand, most of the other nations in the Group of Seven industrial democracies saw a decline. Over the four years through September, German workers earned 7.2% less than they had before the pandemic, and wages in Italy went down by more than 9% in this period.

AsKavan Choksi Business Consultant says, the United States has especially witnessed a strong GDP recovery, and its inflation cooled faster than other large, advanced economies. The origins of this impressive performance can be traced back to the swift response of the lawmakers to the Covid-19 pandemic in March 2020. Before the month had ended, Congress had approved more than $2 trillion in help for the economy as businesses closed and 17 million Americans lost their jobs.  This was simply the start of the spare-no-expense response of the government to the worst economic crisis since the Great Depression. Congress eventually approved roughly $6 trillion to save the economy from the pandemic. Administrative actions like a pause of student loan payments, which added another $875 billion to the rescue tab, were also undertaken.

Finance