Traders are still betting that short-term interest rates will fall sharply in the next few years because they believe—along with Federal Reserve officials and many other analysts—that the post-pandemic economy will more or less resemble the world of 2019. While that may prove correct, the data so far continue to suggest that we remain in a period of structurally faster growth more akin to the second half of the 1990s. The inflation-adjusted value of goods and services produced in the U.S. grew more than 3% in 2023 vs. 0.7% in 2022. There is evidence that businesses are more likely to invest in productivity improvements during sustained periods of full employment and high capacity utilization (like now). In that world, sustained nominal growth around 6% would continue to translate into rapid real growth alongside modest inflation. More speculatively, it is possible that large language models and weight loss drugs could also have sustained productivity benefits, but it might take a while before the impact is visible in the data.
- Date Posted:
- January 26, 2024
For decades, US electricity demand rose by less than 1% annually. But utilities and grid operators have doubled their annual forecasts for the next five years to about 1.5%, according to Grid Strategies, a consulting firm that based its analysis on regulatory filings. That’s the highest since the 1990s before the US stepped up efforts to make homes and businesses more energy efficient. Utilities are having to contend with other power hogs, besides data centers. There’s about $465 billion worth of semiconductor, EV and battery factories announced since Biden took office.