The U.S. is headed for a sharp downturn in 2024 under the weight of continuing high inflation, an uptick in unemployment and a 50% chance of recession, according to the closely watched Outlook Survey by the National Association for Business Economics.
U.S. gross domestic product (GDP) will grow at a mere 1% throughout 2024, NABE President Ellen Zentner, also chief economist at Morgan Stanley, said in the survey. That will be a notable descent from GDP’s 5.2% annualized rate in the third quarter, the fastest rate of expansion since 2021.
Adjusted for inflation, however, real GDP in the third quarter was just 2.1%, the New York Post reports.
One in four of the 30 economists surveyed are now forecasting a recession in 2024, putting the probability at 50%.
Interest rates, now between 5.25% and 5.5%, are the highest they have been in 22 years, and inflation, at 3.2%, is still above the Federal Reserve’s preferred 2% rate.
By comparison, the last time the nation faced an economic crisis was in 2008, when the fed funds rate was 5.25% and inflation was 4.1%.
“Panelists anticipate further slowing in core inflation — excluding food and energy costs — but doubt it will reach the Federal Reserve Board’s 2% target before year-end 2024,” said NABE Outlook Survey Chair Mervin Jebaraj, director of the Center for Business and Economic Research at the University of Arkansas.
Likewise, the Federal Reserve Bank of Atlanta is also predicting a downturn in the coming year, through its GDPNow forecasting model. It points to a decline in construction spending and manufacturing, with labor costs up and productivity down.
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