The current economic condition of the United States and its allies is generally positive, but with some challenges and uncertainties.
In the United States, the economy has been growing, with a 2.1% increase in GDP in 2022 after a 5.9% increase in 2021. The economic growth in Q3 marked a seven-quarter high, supported by job gains and a decrease in inflation. However, a slowdown is expected for Q4 due to factors such as softer jobs growth, tightening credit conditions, and potential government shutdown. Inflation fell to 3.2% in October from 3.7% in September. The goods trade deficit reached almost $1.2 trillion in 2022, near the all-time high.For NATO allies, defense expenditures have been increasing. In 2023, NATO allies agreed to raise the alliance's target for military spending to at least 2% of national GDP. European Allies and Canada have increased defense spending for the eighth consecutive year, with a 2.2% increase from 2021 to 2022. However, only 11 of the 31 members of the alliance are expected to meet the old target in 2023.Looking forward, economic growth is likely to decelerate in 2024 as the effects of monetary policy take a broader toll and post-pandemic tailwinds fade. The fiscal deficit is expected to narrow to a still very large 5.9% of GDP in 2024. There are also potential economic headwinds from reduced lending activity and potential investor losses, as well as uncertainties from elevated trade tensions with China, the ongoing Russia-Ukraine war, and conflict in the Middle East.In conclusion, the current economic condition of America and its allies is generally positive, but with some challenges and uncertainties. The economic outlook will be influenced by various factors, including monetary policy, fiscal policy, trade tensions, and geopolitical conflicts.
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