Economists embrace the idea of ​​a “non-fall” for the economy in 2024

Economists embrace the idea of ​​a “non-fall” for the economy in 2024

Written by Greg Robb

Consensus forecasts indicate that the US economy will continue to grow and unemployment rates will decline, although risks remain

Since the pandemic began to lose its grip on the economy in 2022, recession fears have waxed and waned. Most of 2023 was spent waiting for a downturn. With less than two months left on the calendar so far, those concerns have naturally shifted to 2024.

But gradually, a new outlook emerged that asked, “Why should there be a landing at all?”

That view is the consensus forecast of 34 economists surveyed by the Federal Reserve Bank of Philadelphia and released Monday. The Survey of Professional Forecasters is the oldest quarterly survey of macroeconomic forecasts in the United States, beginning in 1968.

The poll found that “the outlook for the US economy looks somewhat better now than it did three months ago.”

On an annual average basis, forecasters expect real GDP to rise at a rate of 2.4% this year, and to slow only marginally to a rate of 1.7% in 2024.

These annual forecasts are 0.3 and 0.4 percentage points higher than the estimates in the previous survey.

Forecasters see only a slight increase in unemployment. On an annual average basis, forecasters expect the unemployment rate to slowly trend upward from 3.7% this year to 4% in 2026.

Inflation will trend down, but only slowly.

They expect the annual average of the Personal Consumer Expenditure Price Index, the Fed’s preferred measure, to be at the Fed’s 2% target through 2024 and just above it, at 2.1%, in 2025.

Some economists believe the Fed may have to raise interest rates again because a resilient economy may push inflation higher.

While the economy is able to keep flying, the risks of a hard landing have not gone away, economists said.

In fact, forecasters have raised their estimates of the possibility of negative growth in the first three quarters of next year. They said forecasters expected a 40.9% chance of negative growth in the first quarter — the most likely scenario for negative growth. This was followed by 40.2% in the second quarter and 36.8% in the third quarter.

The consensus forecasts mask that economists are deeply divided on the outlook for 2024. For example, economists at UBS published their forecasts early Monday that see US GDP falling to a rate of just 0.3% in 2024.

In contrast, economists at Goldman Sachs said they expect a much stronger growth rate of 1.8% on a Q4 basis than in the fourth quarter.

-Greg Robb

This content was created by MarketWatch, operated by Dow Jones & Co. MarketWatch is published independently of Dow Jones Newswires and The Wall Street Journal.


(End) Dow Jones News Agency

11-13-23 1151ET

Copyright (c) 2023 Dow Jones & Company, Inc.

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