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Showing posts with the label Connecting the Dots: Understanding Aggregate Demand and Consumption Patterns

U.S. Economic Growth Slows Amid Tariff Pressures: A 2025 Outlook

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📉 U.S. Economic Growth Slows Amid Tariff Pressures: A 2025 Outlook As 2025 unfolds, the U.S. economy is showing signs of strain amid a global slowdown and heightened trade barriers. Here's a detailed look at the latest forecasts and implications based on insights from the OECD, Federal Reserve, and key market indicators . 📊 1. U.S. Growth Forecast Downgraded by OECD The Organisation for Economic Co-operation and Development (OECD) has revised the U.S. GDP growth forecast for 2025 to 1.6% , down from 2.8% in 2024 . The forecast for 2026 remains muted at 1.5% , reflecting persistent uncertainty driven by: Elevated trade barriers Reduced consumer spending power Sluggish business investment 💸 2. Tariffs Fueling Inflation & Trade Costs The average U.S. tariff rate has climbed to 15.4% , the highest level since 1938 . These tariffs have raised import costs, which are now being passed on to consumers: Projected consumer price inflation is expected to rise to...
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Connecting the Dots: Understanding Aggregate Demand and Consumption Patterns

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Aggregate demand and consumption patterns are key drivers of economic activity, shaping the overall level of output and employment in an economy. In this post, we'll explore the concept of aggregate demand, unravel the factors that influence consumption patterns, and understand their significance in the broader economic landscape. Aggregate Demand: The Engine of Economic Activity Aggregate demand represents the total demand for goods and services in an economy at a given price level and time period. It is composed of four main components: Consumption (C): Consumer spending on goods and services, including durable goods (e.g., cars, appliances), nondurable goods (e.g., food, clothing), and services (e.g., healthcare, education). Consumption is typically the largest component of aggregate demand and is influenced by factors such as income, wealth, consumer confidence, and interest rates. Investment (I): Business spending on capital goods such as machinery, equipment, and buildings,...
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