The Federal Reserve is rushing to revise its 2023 projections as the US economy exceeds expectations.

The U.S. economy has become the unexpected star performer of the year, leading Federal Reserve officials to revise their growth projections for 2023. Various positive indicators, including consumer spending and residential investment, have consistently surpassed expectations, prompting economists to adjust their forecasts. The Atlanta Fed’s unofficial estimate even suggests a remarkable 5.6% annualized expansion in the third quarter, a significant improvement from just three months ago. This turnaround may cause the Fed to reconsider its 2024 interest-rate cut projections. If GDP growth exceeds 3.2% in the next quarter, it would be the strongest performance since 2021 when the U.S. recovered from the initial shock of the pandemic. In contrast, China’s outlook has been downgraded due to a growing property crisis. The Fed’s previous projections anticipated a meager 1% growth in 2023, which was a significant upgrade from the earlier forecast of a recession. The new projections, to be released after the September policy meeting, are expected to be around 1.8% to 2%, with lower unemployment rate predictions. This surge in growth might result in the Fed scaling back its anticipated rate cuts for next year. Despite the optimistic outlook, the central bank is likely to maintain its benchmark interest rate in September. Currently, there is a 93% chance that rates will remain unchanged, according to the CME Group’s Fedwatch tool. Inflation data and a recent rate hike have allowed policymakers to proceed cautiously.