The US economy has defied all expectations over the past year.  A much-anticipated recession in 2023 never materialised. The economy accelerated in the last quarter of the year. So far in 2024, the economy appears to be growing at a healthy clip of 2.5%. Unemployment is at exceptionally low levels. Growth in employment has been exceeding expectations, while job openings continue to exceed the number of unemployed people. This should all be good news.  

Sometimes, the more things change, the more they stay the same. The past year has been confounding for most economists. Economic data and historical precedent suggested that a US recession was likely. Yet the year came to an end with continued strength in economic activity. At the same time, inflation declined rapidly and, by some measures, reached the Fed’s target by year-end. The “soft landing” which had appeared as a narrow possibility, suddenly seemed probable. Unsurprisingly, the markets rallied.  

US debt ceiling discussions are a predictable feature of the policy-making process. The only uncertainty regarding the Treasury’s ability to continue meeting its cash obligations was timing: would it be July or August? As it turns out, the date is likely to be sometime in June.