The US economy keeps on producing positive surprises, and there is increasing optimism it will be able to perform the soft landing that so few economists were predicting at the start of 2023.
That would mean inflation falling back to the 2 per cent target at the same time as the economy avoids a recession. Annual inflation in October was 3.2 per cent; below economists’ expectations and down from the 3.7 per cent in September.
The assumed wisdom was that the economy would have to shrink for price growth to fall this quickly. However, as of the third quarter of this year, real gross domestic product grew at 5.2 per cent (the US, unlike the UK, uses annualised figures for its GDP data) and the unemployment rate is still yet to rise above four per cent.