US economy expected to grow above 2% despite recent shocks

https://www.reuters.com/business/us-economy-quite-resilient-should-keep-growing-above-2-feds-powell-says-2026-04-29/

by latentframe • 3 months ago

3 3 3 months ago

If the growth is increasingly led by investment (like AI, infrastructure) more than by the consumption then the cycle dynamic could be very different from the previous expansions

aurareturn• 3 months ago

Isn't 2% less than inflation? So no growth at all - even contraction.

jfengel• 3 months ago

Yes, but the two aren't exactly comparable. Inflation is consumer inflation -- what customers pay for products. In fact, consumer inflation leads to higher GDP, if they're drawing down savings to pay higher prices.

GDP covers a broader range of transactions, and it can be useful to look at it as an absolute rather than just relative to inflation. Right now, a lot of money is being spent on data centers, and (assuming you like data centers) that's an investment in future economic growth.

Inflation, by contrast, fluctuates. Right now it's driven heavily by oil prices resulting from the war in Iran. Hopefully that is temporary.

There are a lot of things wrong with GDP as a measure, so you're right to take this with a grain of salt. But assuming GDP means anything at all, having it be less than inflation is not a problem. An absolute contraction would be more worrying.

In this case I'm not convinced it's a good sign anyway. As I just said, some of it is consumers spending more because they have to -- not a good sign. And data centers as an investment... well, I'm not crazy about that, either.

US economy expected to grow above 2% despite recent shocks

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