![]() On inflation, we expect to see progress over the coming quarters, but the path will probably be bumpy. Furthermore, political volatility surrounding fiscal policy, debt, and outlays could impact government spending over the next few years. However, growth is likely to slow in 20 as infrastructure spend out stabilizes. Government spending was a positive growth driver in 2023 due to federal non-defense spending associated with infrastructure investment legislation passed in 20. We don’t expect residential investment growth to improve until interest rates begin to come down, but pent-up demand is likely to spur growth thereafter. Persistent demand for homes and a dearth of supply was the driver. Residential investment, which had been contracting since 2021, began to grow again in Q3 2023. We expect this trend to intensify over the next several quarters as the Fed resists calls to cut rates until mid-2024. Meanwhile, following strong growth in Q2 2023, business investment growth slowed materially in Q3 2023 as interest rate increases made financing activities more expensive. As inflation and interest rates abate later in 2024, we expect consumption to begin to expand once more. Thus, we forecast that overall consumer spending growth will slow towards yearend and then contract in Q1 2024 and Q2 2024. Additionally, new student loan repayment requirements are beginning to weigh on consumers. Real disposable personal income growth has struggled to grow, pandemic savings are dwindling, and household debt is rising. However, this trend cannot hold, in our view. US consumer spending has held up remarkably well this year despite elevated inflation and higher interest rates. We forecast 2025 GDP growth to come in near potential at 1.7%. However, following this downturn the US economy should begin to normalize. While we forecast that real GDP will grow by 2.4% in 2023, we expect it to slow to 0.9% in 2024. Our 2024 US economic outlook is associated with numerous factors, including elevated inflation, high interest rates, dissipating pandemic savings, rising consumer debt, and the resumption of mandatory student loan repayments. The contraction will be limited in depth and duration, but we expect the National Bureau of Economic Research (NBER) to formerly classify it as a recession at some point in the future.* We forecast two quarters of negative growth that will be broadly felt across the economy. In recent months the prospects for a soft landing have risen, but we continue to believe that bumps await the economy in early 2024. The question remains, however, what kind of landing awaits? Inflation is moderating, interest rates are elevated but stable, labor market conditions are cooling, and consumer spending appears to be decelerating. The Conference Board Economic Forecast for the US EconomyĪfter several years of pandemic-induced turbulence the US economy appears to be coming in for a landing at last. Human Capital Benchmarking & Data Analytics. ![]() Corporate Communications: Getting the Next Job Done.2024: A Year In Preview (C-Suite Outlook).
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