Facilitated by Dr. Edmond J. Seifried
The US economy grew by 1.9% and 2.5% in 2022 and 2023 respectively. The growth continued in 2024 with the most recent third quarter GDP growth rate of 2.8%. Under normal circumstances these growth rates do not seem exceptional, however when one considers that this growth was obtained while the Federal Reserve’s battle against inflation, with its extremely high rates was underway, the growth in the economy seems remarkable.
The Fed seems to be winning the war against inflation and has already begun to lower its policy rate. The fed policy rate at one point was at its highest level in over 20 years. The expected rate cuts projected for calendar year 2025 are significant. It seems likely that the Fed will accomplish the once thought impossible, a soft landing.
However, with a new administration in Washington DC, the strong likelihood of much higher energy production, and the reduction of growth-suffocating government regulation, the economy is poised for much higher growth. But could this growth reignite inflation?
Will the new administration’s plan for massive deportation negatively impact the labor markets and drive up wages and inflation, which would require the Fed to put the brakes on its interest rate normalization plans?
Dr Ed will tackle these issues and much more in our 2025 spring sessions.