The U.S. economy is on track for a soft landing, according to Patricia Krause, chief economist for Latin America, and Ruben Nizard, chief economist for North America at French credit insurer Coface.
After growing 1.9% in 2022, U.S. GDP rose 2.5% in 2023, while Cofece projected in January that this indicator will slow to 1.2% in 2024.
The insurer attributes the expected weakening of US economic growth in 2024 to the lingering effects of restrictive monetary policies.
At the same time, Coface sees rising delinquencies on auto loans and credit cards as signaling challenges for consumers.
Nizard estimated that fiscal momentum will slowly turn negative amid fiscal policy uncertainties.
On Wednesday, the U.S. Federal Reserve Board of Governors projected that the U.S. economy will grow 2.1% in 2024, up from its 1.4% projection last December.
U.S. economy
U.S. inflation has declined substantially since the mid-2022 peak with limited deterioration in the labor market.
While income growth in that nation, amid a still resilient labor market, is expected to continue to support consumption growth in 2024, incentives for investment in clean energy and semiconductors can boost private investment.
In the face of a divided Congress and in an election year, government spending should be contained, contributing to a lower deficit. However, debt service and the execution of public investment programs will keep it high.
Elections
From Coface’s perspective, the 2024 elections, which promise a rematch between Donald Trump and Joe Biden, will confirm the polarization of the political landscape.
Congress could remain divided, hindering policymaking.
While the U.S. domestic economy remains strong and seemingly stable, the same cannot be said for the global outlook.
The Russia–Ukraine war continues and is approaching its third year, with no clear end in sight.
In addition, the October upheaval over the Israel–Gaza war remains at the forefront of geopolitical uncertainty, particularly with respect to the prospect of a broader regional conflict in the Middle East affecting multiple nations.