Americans have more savings, economy grows better than expected

It's been more than a year since the US Federal Reserve (Fed) began raising interest rates rapidly to control inflation, but the world's largest economy has yet to show signs of recession.

The US economy has not yet fallen into recession. (Source: Medium)

In the US, companies are hiring, people are spending freely, the stock market is recovering and the housing market is showing signs of stabilizing. All of this suggests that the Fed’s efforts to control inflation have not significantly weakened the economy.

Instead, the lasting impact of the pandemic is creating opportunities for consumers and employers alike, and this momentum could help keep the economy moving in the right direction.

Many economists believe that the Fed's rate hikes will eventually cool the economy and reduce inflation, possibly leading to a recession later this year.

However, the latest data shows that the economy is doing better than expected. Specifically, job growth remains strong, meaning people have more money in their hands.

In May 2023, employment increased by a surprising 339,000 jobs, and the figures for the previous two months were also higher than initially estimated.

The National Bureau of Economic Research (NBER), which studies the economy and determines whether the US is in a recession, also said the data showed positive signs. Most of the indicators they looked at confirmed the economy was healthy.

The labor market is still recovering from the pandemic, with sectors such as health care, leisure and hospitality. The government is hiring more workers.

In addition, the world’s largest economy has more jobs to fill than people looking for them, driving up wages. Average hourly wages rose 4.3% year-over-year in May 2023, similar to gains seen in March and April.

Additionally, American consumers have plenty of savings. According to a report from the San Francisco Federal Reserve, Americans have about $500 billion in savings after the pandemic. This means they can spend money on activities like travel, concerts, and cruises, even as prices rise.

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