The US economy’s position as the main driver of global growth is being questioned, despite optimistic forecasts.
What happened: This concern was raised by the economist Mohamed El Erian in an article he shared on X, formerly Twitter, on Tuesday.
In his article, El Erian identified three critical factors that will determine the US economy’s ability to lead global growth in 2024. These include the domestic economy’s ability to sustain its growth momentum, its resilience in the face of divisions domestic policies and global uncertainties, and whether investors can secure sufficient liquidity to refinance debts accumulated during periods of low interest rates and high liquidity injections from central banks.
El Erian expressed a nuanced view, recognizing the dynamic growth engines of the U.S. economy and the steps being taken to foster future growth. However, he also highlighted the challenges he faces, including weakening household balance sheets, the risk of a monetary policy blunder by the Federal Reserve and national and geopolitical uncertainties.
El Erian estimated a 55% chance of a soft landing for the US economy, a 30% chance of recession, and a 15% chance of surprise growth due to transformative innovations.
See also: “Simple but very shocking:” El Salvador’s pro-Bitcoin president thinks he knows why the US collects taxes despite the ability to “print unlimited amounts of money out of thin air”
Because matter: The US economy has shown resilience despite successive rate hikes by the Federal Reserve, with Ark Invest forecasting potential annual GDP growth of 7%. However, economic growth of 3.3% in the fourth quarter was slower than in the previous quarter, indicating a potential slowdown.
Despite German bank no longer expects a recession in 2024, Jamie Dimon, CEO of JP Morgan, expressed concern about a potential recession. Additionally, a recent survey revealed that 25% of economists and business analysts expect a recession in the United States in 2024, likely triggered by external factors such as a conflict involving China.
Photo by the International Monetary Fund on Flickr
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