US economic growth is likely to continue into 2024

Gross domestic product, the sum of all goods and services produced in the country, is the broadest measure of the economy.

“Growth is slowing, but the economy is clearly still on a solid path,” said Ben Ayers, senior economist at Nationwide, which recently scrapped its recession forecast for this year. “We have had very strong job growth that is driving higher incomes, giving people money to spend. But that has also kept inflation high, so to be honest, a bit of a cooling off is good news.”

Four years after the pandemic recession, the US economy has rebounded much more strongly than expected. At 3.8 percent, unemployment is in the longest period of near-record low unemployment rates since 1970. Wages are going up. And crucially, families, businesses and governments continue to spend money freely, keeping money sloshing through the economy.

That lavish spending — especially on travel, restaurants, concerts and other services — has recently driven up inflation, rekindling fears that the Federal Reserve may have to be even more aggressive in its efforts to slow the economy.

The central bank has raised interest rates eleven times in the past two years, making it more expensive for households and businesses to borrow money. That has put pressure on some parts of the economy, including home sales, although demand remains strong in many other parts of the economy. Consumer spending rose 0.8 percent in February, marking the biggest one-month increase in more than a year, as families spent money on flights, new cars and dining out.

Ralph Rapa opened a brewery in Coconut Creek, Florida, two months ago and says there’s a steady stream of young families and other locals dropping by for $7 pints. Special event nights are particularly popular: he hosts karaoke on Wednesdays, live music Thursday through Sunday, and paint-and-sip events once a month.

“People may be worried about inflation, but everyone seems to have money to drink and eat,” he said. “They want to get out – they want live music and family-friendly, dog-friendly places to hang out.”

Rapa, a health and safety manager for the railroad, came up with the idea for Rule G Brewing Co. three years ago, when the pandemic was still in full swing. He has poured thousands into the company — a mix of personal and pension funds, crowdfunding, investments and a grant from the Small Business Administration — and expects it will take a few years before it becomes profitable. In the meantime, Rapa says he’s hopeful his business — and the economy — will hold up.

“I don’t want to say this is a recession-proof industry because bars fail all the time,” he said. “But we are in a good place at the moment. People are out and about and want to have a good time.”

Yet there are increasing indications that the Americans are withdrawing. Many families have exhausted their pandemic savings and are taking on additional debt to keep up with costs. Credit card debt has increased by 22 percent since the pandemic. Delinquencies on credit cards and auto loans are also rising, especially among younger and lower-income Americans, as inflation and higher interest rates take their toll on household budgets.

“We’re a little concerned about the American consumer,” said Erik Lundh, chief economist at the Conference Board. “There has been a significant increase in debt, and just paying interest on it is a drain on people’s pockets and their ability to spend and save money.”

As a result, Lundh expects consumer spending to slow in the coming months, potentially negatively impacting economic growth. He expected GDP growth to slow to 0.5 percent by mid-year before recovering in the fall.

“We don’t think things will fall apart this year, but consumers will have to pause and think carefully about how they spend their money,” he said.

In Bend, Oregon, Kristi Coughlin and her family have begun to rethink their spending, especially on food. Instead of eating out three times a week like they used to, they’re eating more “hodgepodge” meals at home – enchiladas with tater tots, for example, or leftover chicken with rotisserie and chili.

“We’re buying less fresh stuff than we used to,” says the 40-year-old registered dietitian. “I no longer get a cart in the supermarket. My new rule is: if I can’t wear it, I don’t buy it.”

Her household of three also relies more on frozen fruits and vegetables, canned beans and leftover meat. Coughlin, who has 17 chickens in her yard, has started trading eggs for a morning brew at her local coffee shop. In total, her family spends about $1,800 a month on groceries, significantly more than before the pandemic.

Other costs, such as medical bills and their eldest daughter’s college tuition, have also increased. Coughlin and her husband, an electrician, are both self-employed, making them particularly sensitive to the vagaries of the economy. They are not struggling financially, at least not yet. “But we are proactively cutting back,” she said, “just in case.”