US economy grew a surprisingly strong 3.3% in year’s end, far better than expected

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1 year ago

January 26, 2024

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The nations economy grew at an unexpectedly brisk 3.3% annual pace from October through December as Americans showed a continued willingness to spend freely despite high interest rates and price levels that have frustrated many households.

Thursdaysreport from the Commerce Departmentsaid the gross domestic product the economys total output of goods and services decelerated from its sizzling 4.9% growth rate the previous quarter.

But the latest figures still reflected the surprising durability of the worlds largest economy, marking the sixth straight quarter in which GDP has grown at an annual pace of 2% or more.

Consumers, who account for about 70% of the total economy, drove the fourth-quarter growth.

Their spending expanded at a 2.8% annual rate, for items ranging from clothing, furniture, recreational vehicles and other goods to services like hotels and restaurant meals.

The GDP report also showed that despite the robust pace of growth in the October-December quarter, inflationary measures continued to ease.

Consumer prices rose at a 1.7% annual rate, down from 2.6% in the third quarter.

And excluding volatile food and energy prices, so-called core inflation came in at a 2% annual rate.

Those inflation numbers could reassure the Federal Reserves policymakers, who have already signaled that they expect to cut their benchmark interest rate three times in 2024, reversing their 2022-2023 policy of aggressively raising rates to fight inflation.

Although GDP growth came in hotter than expected in the fourth quarter, underlying inflation continued to slow,’ said Paul Ashworth, chief North America economist at Capital Economics. The upshot is that an early spring rate cut by the Fed is still the most likely outcome.

The state of the economy is sure to weigh on peoples minds ahead of the November elections. Afteran extended period of gloom, Americans are starting to feel somewhat better about inflation and the economy a trend that could sustainconsumer spending, fuel economic growth and potentially affect voters decisions.

Ameasure of consumer sentimentby the University of Michigan, for example, has jumped in the past two months by the most since 1991.

There is growing optimism that the Fed is on track to delivera rare soft landing keeping borrowing rates high enough to cool growth, hiring and inflation yet not so much as to send the economy into a tailspin.

Inflation touched a four-decade high in 2022 buthas since edged steadily lowerwithout the painful layoffs that most economists had thought would be necessary to slow the acceleration of prices.

The economy has repeatedly defied predictions that the Feds aggressive rate hikes would trigger a recession.

Far from collapsing last year, the economy accelerated expanding 2.5%, up from 1.9% in 2022.

Our expectation is for a soft landing, and it looks like things are moving that way, said Beth Ann Bovino, chief economist at US Bank. Still, Bovino expects the economy to slow somewhat this year as higher rates weaken borrowing and spending.

People are going to get squeezed, she said.

The economys outlook had looked far bleaker a year ago.

As recently as April 2023, an economic model published by the Conference Board, a business group, had pegged the likelihood of a US recession over the next 12 months at close to 99%.

Even as inflation in the United States has slowed significantly, overall prices remain nearly 17% above where they were before the pandemic erupted three years ago, which has exasperated many Americans.

That fact will likely raise a pivotal question for the nations voters, many of whom are still feelingthe lingering financial and psychological effects of the worst bout of inflation in four decades.

Which will carrymore weight in the presidential election: The sharp drop in inflation or the fact that most prices are well above where they were three years ago?

The Fed began raising its benchmark rate in March 2022 in response to the resurgence in inflation that accompanied the economys recovery from the pandemic recession.

By the time its hikes ended in July last year, the central bank had raised its influential rate from near zero to roughly 5.4%, the highest level since 2001.

As the Feds rate hikes worked their way through the economy, year-over-year inflation slowed from 9.1% in June 2022, the fastest rate in four decades, to 3.4% as of last month.

That marked a striking improvement but still leaves that inflation measure above the Feds 2% target.

The progress so far has come at surprisingly little economic cost.

Employers have added a healthy 225,000 jobs a month over the past year.

And unemployment hasremained below 4% for 23 straight months, the longest such streak since the 1960s.

The once red-hot job market has cooled somewhat, easing pressure on companies to raise pay to keep or attract employees and then pass on their higher labor costs to their customers through price hikes.

Its happened in perhaps the least painful way: Employers are generally posting fewer job openings rather than laying off workers.

That is partly because many companies are reluctant to risk losing workers after having been caught flat-footed when the economy roared back from the brief but brutal 2020 pandemic recession.

Businesses are getting rid of job openings, but theyre holding onto workers, Bovino said.

Another reason for the economys sturdiness is that consumers emerged from the pandemic in surprisingly good financial shape, partly because tens of millions of households had received government stimulus checks.

As a result, many consumers have managed to keep spending even in the face of rising prices and high interest rates.

Some economists have suggested that the economy will weaken in the coming months as pandemic savings are exhausted, credit card use nears its limits and higher borrowing rates curtail spending.

Still, the government reported last week thatconsumers stepped up their spending at retailersin December, an upbeat end to the holiday shopping season.

Sports

Stars vs. Jets (May 15, 2025) Live Score – ESPN

Published

33 mins ago

May 16, 2025

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Stars vs. Jets (May 15, 2025) Live Score - ESPN

Svechnikov breaks late tie as Hurricanes beat Capitals 3-1 to reach Eastern Conference final

— Andrei Svechnikov scored the go-ahead goal with just under two minutes left and the Carolina Hurricanes beat the Washington Capitals 3-1 in Game 5 on Thursday night, winning the second-round series and advancing to the Eastern Conference final for a…

Sports

Canes oust Caps in G5 on Svechnikov’s late goal

Published

33 mins ago

May 16, 2025

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Canes oust Caps in G5 on Svechnikov's late goal

Associated Press

May 15, 2025, 09:53 PM ET

WASHINGTON — Andrei Svechnikov scored the go-ahead goal with just under two minutes left and the Carolina Hurricanes beat the Washington Capitals 3-1 in Game 5 on Thursday night, winning the second-round series and advancing to the Eastern Conference finals for a second time in three years.

Captain Jordan Staal scored his first goal of the playoffs, and Frederik Andersen stopped 18 of the 19 shots he faced, including several on Alex Ovechkin.

After a give-and-go with defenseman Sean Walker, Svechnikov’s shot got through Logan Thompson from a bad angle with 1:59 remaining, and that was the difference in a back-and-forth game.

Seth Jarvis sealed it with an empty-net goal with 26.1 seconds left.

The Hurricanes improved to 10-5 in potential closeout games in seven trips to the postseason with coach Rod Brind’Amour. They will face either the Florida Panthers in a rematch of the 2023 East finals or the Toronto Maple Leafs in a reminder of 2002. The Panthers are up 3-2 in their series with the chance to eliminate the Maple Leafs as soon as Friday night.

Carolina is 35-7-2 through 82 games and then two rounds when scoring first.

Despite an unassisted goal by Anthony Beauvillier and some important saves among the 18 from Thompson, the Capitals saw their season end after finishing atop the conference and the Metropolitan Division, and beating the Montreal Canadiens in the first round to win a playoff series for the first time since their Stanley Cup run in 2018. Washington started strong, got a few quality scoring chances but could not get through tight-checking defense to prolong the series.

After giving up the backbreaker to Svechnikov, Thompson was pulled for an extra attacker and the Capitals were unable to equalize and let Jarvis get to the loose puck for his empty-netter.

Politics

MPs waver once again as ’emotive’ assisted dying bill heads back to the Commons

Published

33 mins ago

May 16, 2025

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MPs waver once again as 'emotive' assisted dying bill heads back to the Commons

Further moves to amend the controversial assisted dying bill are being made by MPs as it returns to the Commons for another day of emotionally charged debate.

After a marathon committee stage, when more than 500 amendments were debated, of which a third were agreed, the bill returns to the Commons with 130 amendments tabled.

As a result, the final and decisive votes on whether the bill clears the Commons and heads to the House of Lords are not expected until a further debate on 13 June.

The bill proposes allowing terminally ill adults with less than six months to live to receive medical assistance to die, with approval from two doctors and an expert panel.

Why is assisted dying so controversial – and where is it already legal?

In a historic vote last November, after impassioned arguments on both sides, MPs voted 330 to 275 in favour of Labour MP Kim Leadbeater’s Terminally Ill Adults (End of Life) Bill.

Sir Keir Starmer voted in favour, while Deputy PM Angela Rayner, Foreign Secretary David Lammy, Health Secretary Wes Streeting and Justice Secretary Shabana Mahmood voted against.

The Conservatives were also split, with leader Kemi Badenoch voting in favour and former PM Rishi Sunak against. Reform UK leader Nigel Farage also voted against the bill.

The PM, who is attending a summit in Albania, will be absent this time, but asked for his current opinion, told reporters: “My views have been consistent throughout.”

No fewer than 44 of the new amendments have been tabled by Ms Leadbeater herself, with government backing, a move that has been criticised by opponents of the bill.

Opponents also claim some wavering MPs are preparing to switch from voting in favour or abstaining to voting against and it only needs 28 supporters to change their mind to kill the bill.

Confirmed switchers from voting in favour to against include Tory MPs George Freeman and Andrew Snowden, Reform UK chief whip Lee Anderson and ex-Reform MP Rupert Lowe.

Labour MP Debbie Abrahams and Tory MP Charlie Dewhirst, who abstained previously, are now against and Labour’s Karl Turner, who voted in favour at second reading, is now abstaining.

Mr Turner, a former barrister, told Sky News that an amendment to replace a high court judge with a panel of experts “weakens the bill” by removing judicial safeguards.

But in a boost for the bill’s supporters, Reform UK’s Runcorn and Helsby by-election winner Sarah Pochin, a former magistrate, announced she would vote in favour. Her predecessor, Labour’s Mike Amesbury, voted against.

“There are enough checks and balances in place within the legislation – with a panel of experts assessing each application to have an assisted death, made up of a senior lawyer, psychiatrist, and social worker,” said Ms Pochin, who is now the only Reform UK MP supporting the bill.

A Labour MP, Jack Abbott, who voted against in November, told Sky News he was now “more than likely” to vote for the bill, which was now in a much stronger position, he said.

Ms Leadbeater’s supporters strongly deny that the bill is at risk of collapse and are accusing its opponents of “unsubstantiated claims” and of “scare stories” that misrepresent what the bill proposes.

“There is a pretty transparent attempt by opponents of the bill to try to convince MPs that there’s a big shift away from support when that simply isn’t true,” an ally of Ms Leadbeater told Sky News.

Speaking in an LBC radio phone-in on the eve of the debate on the amendments, Ms Leadbeater said she understood her bill was “an emotive issue” and there was “a lot of passion about this subject”.

But she said: “I would be prepared to be involved in a compassionate end to someone’s life if that was of their choosing. And it’s always about choice. I have friends and family who are very clear that they would want this option for themselves.

“There is overwhelming public support for a change in the law and literally everywhere I go people will stop me and say thank you for putting this forward. I would want this choice.”

Also ahead of the debate, health minister Stephen Kinnock and justice minister Sarah Sackman wrote to all MPs defending the government’s involvement in Ms Leadbeater’s amendments to her bill.

“The government remains neutral on the passage of the bill and on the principle of assisted dying, which we have always been clear is a decision for parliament,” they wrote.

“Government has a responsibility to ensure any legislation that passes through parliament is workable, effective and enforceable.

“As such, we have provided technical, drafting support to enable the sponsor to table amendments throughout the bill’s passage. We have advised the sponsor on amendments which we deem essential or highly likely to contribute to the workability of the bill.”