A resilient U.S. economy continues to surprise
The U.S. economy has proved far more resilient than anyone could have expected despite the Federal Reserve’s efforts to cool it to rein in inflation. The Goldilocks outcome of strong growth and lower inflation was achieved by a timely expansion in the supply side of the economy—mainly better-than-expected gains in the workforce and productivity. This explains our updated economic forecasts anticipating stronger growth, a sturdy labor market, stubborn inflation, and a Fed that will move cautiously toward its first rate cut—including the possibility of not being able to cut interest rates at all this year.