As economists examine the economic environment for 2024, caution is the prevailing sentiment, shaped by the unexpected events of 2023. The general consensus points to a potential slowdown in growth, indicating cautious economic growth in the short term, and the possibility of a moderate recession. This scenario is set in an economic environment characterized by low interest rates and low inflation. However, amid this caution, some experts envision a stronger-than-expected performance scenario and possibly earlier and more frequent interest rate cuts, which could positively impact long-term economic growth.
Kevin Kleisen's view on the American economy
Kevin Klesen, business economist and research officer at the Federal Reserve Bank of St. Louis, provides a nuanced perspective on the U.S. economy. It expects a moderate deterioration in economic conditions but notes that real GDP growth and job gains, the leading indicators of short-term economic growth, remain positive. This could lead to a “soft landing” for the US economy.
The main factors in forming expectations
The economic outlook depends largely on a potential shift in Federal Reserve policy, which is a critical element in shaping the economic environment. In addition, the rise in inflation that began in 2022 is expected to subside in 2024. However, the consensus does not expect a return to the exceptionally low inflation and interest rates of the pre-pandemic period.
Reward savers and boost the housing market
Andrew Patterson, chief international economist at Vanguard, highlights a major shift in the US economy away from ultra-low interest rates. This change could positively impact savers and stimulate the housing market, affecting the economic environment and potentially contributing to long-term economic growth.
Challenges and positives
While the overall outlook for the US economy is fairly positive, challenges such as geopolitical risks, including conflicts and elections, increase uncertainty. On the positive side, recent increases in productivity and investments in new manufacturing capabilities and technologies indicate a period of transformation that can positively impact long-term economic growth and demonstrate economic impact.
The US economy's unexpected journey in 2024
Drawing lessons from the surprising year 2023, economists are cautiously forecasting 2024 for the US economy. The US economy, known for its unpredictability, is on the verge of another potentially surprising year. Despite the looming risks, the country's past resilience suggests it may defy expectations in an unpredictable year ahead, highlighting the economic impact in real terms.
