GDP growth in the third quarter came in at 2.8%, and the Atlanta Fed estimates GDP growth in the fourth quarter will be 3.3%, well above the CBO’s 2% estimate of long-run growth in the US, see the first chart below. In other words, momentum in the economy is strong, and the incoming administration may add additional tailwinds to the outlook.
Combined with the recent uptrend in inflation, the probability is rising that the Fed may have to raise interest rates in 2025, see the second chart.
In other words, a repeat of what we saw in the mid-1990s, where the Fed, after a few cuts, started raising interest rates again. Our weekly chart book with high-frequency indicators for the US economy is available here.
Source: BEA, Haver Analytics, Apollo Chief EconomistSource: BEA, Haver Analytics, Apollo Chief Economist
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