U.S. anticipates slower growth in 2024 due to monetary policy impact

Posted on February 5, 2024   |  

The U.S. is likely to see a slowdown in growth in 2024 due to the ongoing impact of monetary policy on the labor market and consumer spending.

In 2023, despite interest rates reaching two-decade highs, consumers played a key role in surpassing economic growth expectations.

The Federal Reserve's rapid rate hikes from March 2022 resulted in current rates of 5.25 to 5.5%, affecting borrowing costs for mortgages, auto loans, and business investments.

Elevated rates in 2023 led to a robust 3.3% economic growth in the fourth quarter, driven by consumer spending that defied high rates and inflation concerns.

Real consumer spending, adjusted for inflation, grew by 2.8% in Q4 2023, but predictions suggest a decline in the coming months, potentially dropping to one to one and a half percent in Q1 2024.