The U.S. Economy in 2024: Unexpected Strength Amid Major Challenges
Despite major economic and political challenges in 2024, the U.S. economy maintained strong momentum,
defying expectations of a slowdown and demonstrating exceptional resilience.
Contents
Challenges
Defying Challenges: The U.S. Economy Remains Strong
Over the past few years, the U.S. economy has consistently surprised analysts by exceeding expectations of a slowdown, and 2024 was no exception. Despite the uncertainties surrounding the presidential elections, rising interest rates, and a slowing labor market, economic growth remained robust, solidifying the United States’ position as the leader among G7 nations, according to the International Monetary Fund.
However, the year was not without obstacles. Inflation took longer to subside, prompting the Federal Reserve to maintain its policy of high interest rates. Additionally, the housing and industrial sectors suffered from elevated borrowing costs, while household debt saw increased delinquency rates, particularly among credit card and mortgage holders.
Consumers
Consumers and Spending: Resilience Amid Cracks
American consumers were the key drivers of economic resilience in 2024. Wage growth, which outpaced inflation, bolstered household wealth, leading to a nearly 2.8% expansion in consumer spending during the year. However, cracks began to emerge as pandemic-era savings were largely depleted, and consumers increasingly relied on loans and credit cards to sustain spending.
Labor Market
The Labor Market and Future Challenges
The labor market showed warning signs with slowed job growth and a slight rise in unemployment, raising concerns about an impending economic turning point. Despite these challenges, the Federal Reserve remained optimistic after lowering interest rates in September. Unemployment rates stayed historically low, and wage growth held steady at around 4%, supporting household financial stability.
Inflation
Inflation and Interest Rates: Challenges in Housing and Industry
It remained stubborn throughout the year, with the Personal Consumption Expenditures Price Index rising by 2.8% in November.
Despite rate cuts, high borrowing costs continued to pressure the housing and industrial sectors.
Manufacturing faced significant setbacks, including layoffs and reduced infrastructure investments, impacting the sector’s resilience.
As 2024 concluded with relatively strong economic growth, challenges surrounding inflation, interest rates,
and labor market performance remain critical factors shaping the U.S. economy’s outlook for the coming year.
The U.S. Economy in 2024: Unexpected Strength Amid Major Challenges