FAST FACTS: The Economy at a Glance

Firstly, we can start with the total output of the United States measured in gross domestic product.

The U.S. Gross Domestic Product (GDP) has seen steady growth since 1947, with notable dips during periods of recession. However, the long-term trend shows a sharp increase in output, particularly post-2008, leading to a current GDP exceeding $25 trillion.

The chart shows the cyclical nature of U.S. economic growth, with periods of rapid expansion followed by downturns, often triggered by recessions. While the economy tends to bounce back after each slowdown, some spikes—like the sharp increase in 2021—signal recovery from significant events, such as the pandemic. On the whole, growth tends to oscillate around the long-term average, represented by the dashed line, which provides a clear reference for understanding how the economy performs relative to its historical norms. This cyclical movement underscores both the resilience and vulnerability of the economy in response to various shocks.

As of July 2024, the U.S. population (POP) has climbed to 337.01 million, continuing its consistent upward trajectory. With more people, the ripple effects extend across sectors, enhancing GDP performance and employment levels, while also presenting opportunities and challenges for infrastructure, resources, and public policy.

This employment trajectory fuels labor markets, boosts consumer demand, and contributes to overall economic activity.

Unemployment spikes during recessions, most notably in 2020 due to COVID-19, but it generally stabilizes or falls below the average during recoveries. The labor market follows a cyclical pattern of crisis and rebound.

The U.S. economy has averted a recession so far by navigating through the inflation spiral. Inflation fluctuated with notable spikes in the 1970s and a sharp increase post-2020. Recessions typically lead to a drop in inflation, but it often stabilizes around the long-term average during recovery phases. The cyclical pattern reflects external shocks and economic adjustments.

The Fed is poised to begin cutting rates tomorrow. Historically, interest rates rise in response to inflationary pressures, with significant hikes during the 1970s and early 1980s as the Federal Reserve aimed to control runaway inflation. More recently, post-2020, interest rates were sharply increased following inflation spikes. The Fed uses rate adjustments to manage inflation, raising them to cool the economy when inflation is high and lowering them to stimulate growth during low-inflation periods or recessions. Tomorrow’s anticipated rate cut continues this cyclical response to changing economic conditions.

A rate cut could provide a significant boost to the housing sector. Lower interest rates often lead to more affordable mortgage rates, which in turn make homeownership more accessible for buyers. This typically increases demand for homes, potentially driving up prices and stimulating activity in the housing market. Additionally, lower borrowing costs can encourage more refinancing activity and spur investment in real estate. However, if demand surges too quickly, it could also reignite inflationary pressures within the housing sector, especially if supply remains constrained. Overall, a rate cut may bring renewed momentum to the housing market but must be managed carefully to avoid overheating.

What's my take? Considering that both candidates for the 2025 Presidency are aiming to boost the economy and middle class with further spending, and productivity is ripe for rapid improvement with artificial intelligence, digital everything, robotics, and super computing, I foresee a pickup in the secular economic growth trend. Which would be welcome news!

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