Confirmed: Economic Outlook for 2024 is Good

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Three respected business forecasting groups agree that 2024 looks good. The Conference Board reported in February that 2024 “started on a strong footing with various indicators of business activity, labor markets, sentiment, and inflation are moving in a favorable direction”. While they had forecast a recession for 2024, they were “upgrading” that forecast and no longer predicting one for this year.

Also reporting in February, The National Association of Business Economics (NABE) said that the outlook for this year is brighter than first thought”.  They increased their prediction for overall GDP growth in 2024 to 2.2% which is up from their December forecast for 1.3%.

Similarly, their December forecast for job growth average of 55,000 per month to 129,000, was certainly dramatic even though they also predicted that it would “taper off” to 100,000 in the third and fourth quarters.

They base their “upward revisions” in growth forecasts on the improvements in key sectors of the economy like: “personal consumption expenditures, non-residential fixed investment, residential investment, government consumption expenditures and gross investment.”

The Business Roundtable reported in their 1st Qtr. CEO Economic Index (based on their survey of CEO’s) predicted an “accelerating U.S. economy.”

Reading Beyond the Headlines”

Although the economic outlook is good for 2024, it will not be without certain “headwinds” the Conference Board warned. Although 6 of their 10 economic index items were positive, contributing to their optimism, the other 4 items were negative and point to slow growth to near zero percent over the 2nd and 3rd quarters.

The Conference Board chairman, Chuck Robbins, who is also CEO of Cisco, recommended that to “further strengthen the economy, the US needs to “double down on policies that spur domestic investment” like the “Tax Relief for Families and Workers Act”. This bill, that recently passed in the House and was pending in the Senate last month (Feb 2024), should be at “the top of the list” Robbins said.

(Authors Note: Because of the very large Tax reductions in the Trump administration, and the infrastructure bill, under Biden, I would be concerned about this new bill without corresponding tax increases elsewhere).

The CEO’s report at the Business Round table, however, indicated increasing economic activity over the next six months. That group also predicted that the Federal Reserve’s Open Market Committee, to begin rate cuts beginning in the second quarter. This would be encouraging for the housing market if it comes in time, and is significant enough to have an effect during the height of the selling season.

The National Association for Business Economics reported that 75% of their panelists (total of 41 professional forecasters) believed that there would be no recession in 2024, but there were concerns about possible events that could change this forecast.

A few of these concerns are the Middle East conflict driving up oil prices, supply chain interruptions, a stagnant Chinese economy, and instability around U.S. elections.

Consensus  

The consensus of the three groups would be that although there may be no recession and there are generally conditions for a good year, there are concerns that could cause a downturn later in 2024. This may not cause a recession, but neither will it be a great year. Based on the forecasts, we can be reasonably confident about having a good year.

The decisions on hiring and investments can go forward with confidence, but some may wat to “hedge their bets” and move with cautious optimism. However, local conditions certainly, will be key to decision making.

Comment: It always interests me how economic forecasting shows the interdependence of the world economy. The same goes for forecasts in agriculture, where factors like weather, wars, and investment climate affect production. We saw this dramatically in Ukraine where, as a single country, grew 10% of the world supply of wheat, 15% of Corn, 13% of Barley. and 50% of the world trade in sunflower oil. With such production and consequent exportation of millions of tons of Wheat, Corn, and Barley, a major disruption caused by war or drought can cause literal starvation in countries thousands of miles away, as well as a depression or recession at home.

(Note: The White House published an article in March of last year (2023) on “The Importance of Measuring Fiscal and Economic Costs of Climate Change”, so this factor will need to be a consideration in future economic forecasts).

In any case, 2024 looks to be a good year for the economy. Maybe not super, but good is good.

As always, Stay Safe and continue to pray for Ukraine, Russia, Israel, and Gaza!