The US is well into the election season and the economy is one of the main areas where the candidates will have to show their positions<\/p>\n
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The US economy, according to data released last week, grew at a rate of 3.3% in the fourth quarter of 2023, compared to initial forecasts of 2%. At the same time, inflation, especially structural inflation, i.e. when we remove the effect of food and energy products, is moving close to the 2% target.<\/p>\n
This growth appears to have been supported by consumer spending and government spending (whether or not this means an unthinkable public debt that can always be managed through money printing), which kept business activity at satisfactory levels.<\/p>\n
Analyzes show that wage increases have outpaced increases in goods and services due to inflation, keeping consumption at high levels that may not be sustained. Interest rate increases through the tightening of monetary policy by the US Central Bank did not lead to a significant reduction in consumption, as one would have expected, making the process of containing inflation more time-consuming.<\/p>\n
It should be noted that the maintenance of consumption seems to have led to an increase in borrowing, so there is a possibility that a significant part of the population will face a problem of servicing it in the near future, which according to analysts may lead to a slowdown in the American economy. But the general conclusion that everyone agrees on is that the US economy has weathered the shock of the sharp rise in interest rates and remains resilient. This is also reflected in the stock market indices in the US.<\/p>\n
It is also emphasized that the USA is well into the pre-election period and the economy is one of the main areas in which the candidates will have to highlight their positions. Certainly the current administration will want to present a strengthened economy – the result of good governance, and from the opposite bank the Republicans will highlight the increases in taxes and the problems facing citizens and businesses.<\/p>\n
We mustn't forget last year's mini-banking crisis in which regional banks in America were forced to either be bought out\/backed or closed. Risk appears to remain with the FED taking steps to ensure the viability of the US financial system.<\/p>\n
One of the reasons for the collapse of regional banks in that period was the sharp rise in interest rates making "locked" deposits or similar financial products problematic. It is recalled that there were cases when major American banks, with the blessing of the FED, joined forces to take over the deposits and assets of some regional banks in order to prevent the risk of the crisis spreading.<\/p>\n
The statistics released appear to shift the timing of the FED's decisions on rate cuts in May, from the March that investors had originally estimated. The next session of the Fed's Board of Governors may indicate its intentions. It is recalled that the monetary policy of the central banks is influenced by the course of inflation but also by the slowdown created in the economies (the latest statistics on the American GDP in the last quarter of 2023 demonstrate the opposite).<\/p>\n
At the same time, as expected, the ECB kept interest rates at the same levels, with the European economy showing significant signs of slowing down. Already the problems in Germany's economy, a result of high energy prices, the decrease in exports and the inability to adapt, put the governing coalition at risk. Typical are the images of farmers in Germany and France going on protest marches.<\/p>\n
Many analysts emphasize that Europe is the big loser from the situation in Ukraine, both because of its proximity to the hostilities and because of the close ties, energy and business, that existed with Russia. In contrast to the USA, which Europe follows, which seems to be recovering and Russia which shows positive growth rates, a little over 3% (a big challenge remains the size of the budget for armament programs).<\/p>\n
The first estimates for the growth of the Chinese economy on the other hand for 2023 speak of 5.2% lower than expected which was over 7%. It is noted that for China 2022 was a difficult year due to the great real estate crisis.<\/p>\n
It is with particular interest that we expect to see the final statistics concerning the course of the GDP of the main international economies as well as of Cyprus. It is clear that there is a slowdown, but the question is its size and whether it can lead to a recession.<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
The US economy grew at a rate of 3.3% in the fourth quarter of 2023, surpassing initial predictions of 2%. The growth is attributed to support from consumer spending and government expenditure. Wage increases exceeded increases in goods and services, leading to high levels of consumption. However, there is a possibility that increased borrowing could lead to future problems for the population. The US economy has shown resilience despite the sharp increase in interest rates. In contrast, the European economy is showing signs of slowdown, particularly in Germany. China's economy is also expected to grow at a lower rate than anticipated. The final statistics on the GDP of major international economies, including Cyprus, are yet to be seen, but there is a slowdown in growth. The focus is on the magnitude of the slowdown and whether it could lead to a recession.<\/p>\n","protected":false},"author":2,"featured_media":2774,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"Default","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4],"tags":[486,3,26,696,576,415,739,187,380],"class_list":["post-2773","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cyprus","tag-china","tag-cyprus","tag-economy","tag-gdp","tag-germany","tag-government","tag-ii-iiiiiii","tag-international","tag-us"],"acf":{"keyphrase":"","keywords":"","sourceimg":"","country-category":""},"yoast_head":"\n