The U.S. Federal Reserve has raised its U.S. GDP growth projection for 2024 to 2.1%, up from 1.4% in its previous outlook, signaling the economy's resilience amidst global challenges. This positive development comes alongside a surge in immigration, which is helping bolster the economy, according to Joyce Chang, chair of global research at JPMorgan.

Despite high interest rates imposed by the central bank in an effort to manage inflation levels, the U.S. economy has shown strength. The labor market has remained relatively hot, with unemployment staying below 4% in February and the addition of 275,000 jobs. The Federal Reserve also revised its projections for core personal consumption expenditure (PCE) inflation, expecting it to come in at 2.6% compared to the previous forecast of 2.4%, following recent inflation prints in January and February that were higher than expected.

Chang pointed out that the recent increase in immigration has contributed significantly to the growth of the U.S. population, which now stands at nearly 6 million more people than two years ago. This influx has played a vital role in boosting consumption levels, in addition to the already low unemployment figures. However, she noted that this upward pressure on wages, housing costs, and energy prices suggests that the Federal Reserve is not entirely out of the woods when it comes to inflation.

A Congressional Budget Office report estimated that net immigration to the U.S. was 3.3 million in 2023, projecting it to remain at that level in 2024 but decrease to 2.6 million in 2025, and 1.8 million in 2026. Immigration, especially border crossings, has become a highly debated topic leading up to the November presidential election. Chang highlighted events such as the situation in Haiti that could amplify this issue, but emphasized that overall, immigration has a positive impact on the economy.

Chang also recognized other factors contributing to the outperformance of the U.S. economy compared to its peers. These include a high fiscal deficit and energy independence, with Europe struggling to reduce its reliance on Russian energy supply. The Congressional Budget Office projected that the U.S. federal budget deficit would reach $1.4 trillion in 2023, equivalent to 5.3% of GDP, and rise to 6.1% of GDP in both 2024 and 2025.

Considering the upcoming election year and anticipated government spending, JPMorgan expects only a "shallow" loosening cycle from the Federal Reserve. Inflationary pressures are expected to persist due to increased government expenditure and immigration.

Overall, the U.S. economy continues to display resilience, with the Federal Reserve's revised GDP growth projection of 2.1% for 2024 reflecting its positive outlook. The surge in immigration, coupled with other factors such as high fiscal deficit and energy independence, are contributing to the country's economic strength, despite ongoing challenges.