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United States economic outlook: 2023 year-in-review and early 2024 developments in five charts

8 May 2024|Briefing note

The U.S. above-potential GDP growth in 2023 was driven by resilient consumers supported by a strong labor market and receding inflation.

1. The United States Gross Domestic Product (GDP) rose 2.5% in 2023, above the economy’s long-term growth potential and the 1.9% growth in 2022 (figure 1). Consumer spending was the main driver of the GDP increase in 2023 (figure 1).

2. An average of 251,000 new jobs were created per month and 3 million new jobs were added in 2023, while 829 million new jobs were added in the first quarter of 2024, with the three-month average gain accelerating to 276,000 jobs per month. The unemployment rate was at 3.8% in March 2024, continuing a streak of below 4% readings that has lasted for more than two years (figure 2).

3. Measured by the Consumer Price Index (CPI), inflation was halved in 2023, going from an average annual rate of 8% in 2022 to 4.1% in 2023. Core prices, which strip out volatile food and energy components, declined from an average annual rate of 6.2% in 2022 to 4.8% in 2023 (figure 3).

4. The Federal Reserve is adopting a “wait-and-see” approach before declaring the end of its monetary tightening cycle. In March 2024, the Federal Reserve held interest rates steady for a fifth consecutive meeting (figure 4). In the projections released after the March meeting, three interest rate cuts were penciled in for 2024.

5. High interest rates in advanced economies, the U.S. in particular, have translated into higher financing costs for the corporates and governments of Latin America and the Caribbean. Average coupon rates on the region’s dollar-denominated sovereign issuances have climbed steadily in recent years, from 3.6% in 2021 to 5.1% in 2022 and 6.6% in 2023, illustrating how the region’s borrowing costs have increased (figure 5).

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