The economy is expected to experience a slowdown in 2023
According to GlobalData, the US economy is forecast to grow by 0.3% in 2023, compared to 2.1% growth recorded in 2022. The ongoing Russia Ukraine war and strong inflationary pressures will continue to negatively impact the economy in 2023. Moreover, with high levels of inflation accompanied by tighter monetary policies will further dampen household spending across the nation. Furthermore, with a slowdown in the overall domestic production, overall labor demand and wage growth is also expected to be impacted.
The US and India elevate Strategic partnership
In February 2023, with the launch of the initiative on Critical and Emerging Technology (iCET), India and the US elevated their strategic partnership and defense industrial cooperation between the governments, businesses, and academic institutions of both the economies. In the future, both countries aim to establish greater cooperation in fields including critical and emerging technologies, co-development and co-production, biotechnology, advanced materials and rare earth processing. In addition, on February 1, 2023, both nations announced to strengthen their defense partnership as China’s threat increases.
Government announces budget 2023
In March 2022, President Joe Biden proposed the budget for FY2023 which includes $5.8 trillion (24.5% of GDP) in total spending. The budget proposal includes 1.6 trillion in discretionary spending and projects a deficit, amounting to $1.2 trillion. Under the 2023 budget: i) $6.5 billion has been earmarked for loans towards the agriculture department with an aim to help electricity providers to transit to clean energy, ii) An allocation of $5.0 billion towards climate adaptation, iii) $1.0 billion towards Department of Education with an aim to increase the number of mental health professionals in schools, iv) $372 million for NIST (National Institute for Standards and Technology) manufacturing programs, v)$5.0 billion towards Biden’s proposed Advanced Research Projects Agency for Health, which would invest heavily on cancer research.
Oil production to rise in the US in 2023
According to OPEC, as of 2021, the US is endowed with 2.5% of crude and 5.9% of natural gas reserves, respectively, as a percentage of world total in 2021. However, with the upcoming EU ban on seaborne imports of petroleum products from Russia, effective February 5, 2023, the global crude oil prices are expected to increase in H1 2023. According to US Energy Information and Administration (EIA), the US petroleum production is forecast to grow by 5% (1 million b/d) in 2023 and increase by 3% (650,000 b/d) in 2024. However, the production in 2023 might be impacted due to weakened demand, pipeline bottlenecks and a lack of new liquefied natural gas (LNG) export plants. In addition, if Russia further decides to slash oil supplies in 2023, the global oil prices will continue to weigh heavily on the US economy as well as global markets.