US
The US economy remains resilient in Q3, prompting an upward revision of 0.3 percentage points to the country’s real GDP baseline growth forecast, which now sits at 1.2% this year. Steady consumer spending and a strong labour market are the primary drivers.
In Q3, business and consumer confidence sees a slight uptick. Unexpected resilience in the US economy to date has generated cautious optimism that a recession can be avoided.
Recessionary concerns are easing, but numerous headwinds will challenge economic growth potential.
US inflation continues to shrink from record-high peaks. In July 2023, inflation stood at 3.2%. A downward revision of 0.1 percentage point in Q3 puts the country’s inflation forecast at 4.1% for the year.
The labour market has been unusually tight since the pandemic. Consequently, wage pressures became a primary driver of inflation in the US. High interest rates are expected to cool the labour market in the months ahead, which will further slow inflation.
The Federal Reserve increased interest rates by 25 basis points again in July, which now sit at 5.25% to 5.5%. But this could be the final increase in their rate-hiking cycle as inflation decelerates and pressure around consumer spending intensifies.
US: Q3 Forecasts
Source: Euromonitor International Macro Model
Note: Data from 2023 onwards is forecast, updated July 2023. Annual rates in percentages. Revisions in percentage points.
Not to be distributed without permission. The data included in this report is accurate according to Euromonitor International at the time of publication in July 2023.