Certainly! Let’s delve into the economic outlook for the United States in 2024. Here are some key considerations based on expert analyses:
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Economic Growth:
- The U.S. economy is expected to decelerate in 2024. The effects of monetary policy and the fading tailwinds from the post-pandemic recovery will play a significant role.
- Real GDP growth is projected to walk the line between slight expansion and contraction, resembling what economists call a “soft landing.”
- After a better-than-expected 2.8% real GDP growth in 2023, the forecast for 2024 anticipates a below-trend 0.7% pace of expansion1.
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Monetary Policy:
- The hiking cycle is likely over, leaving the Fed Funds rate on hold at 5.25%-5.5% until mid-2024.
- If inflation continues to moderate, the Federal Reserve (FOMC) may gradually normalize policy rates starting around the midpoint of next year.
- Quantitative tightening (Fed’s balance sheet runoff program) is expected to continue at the same pace, removing approximately $1 trillion from the economy in 20241.
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Consumer Spending:
- Consumer spending growth is likely to slow down from its firm pace in 2023 due to several factors:
- Diminished excess savings.
- Plateauing wage gains.
- Low savings rates.
- Less pent-up demand.
- Despite these headwinds, healthy household balance sheets and tight labor markets should keep consumer spending positive overall, albeit at a lower rate than in 20231.
- Consumer spending growth is likely to slow down from its firm pace in 2023 due to several factors:
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Fiscal Outlook:
- In 2023, the fiscal deficit roughly doubled to $1.84 trillion (7.4% of GDP) due to increased government spending.
- While this year’s deficit expansion wasn’t classic stimulus, it did inject significant cash into the economy.
- Looking ahead to 2024, the federal deficit is expected to narrow to 5.9% of GDP, reflecting some belt-tightening on the spending side but still remaining substantial1.
In summary, the U.S. economy is poised for a soft landing in 2024, with growth moderating, interest rates stabilizing, and consumer spending adjusting to new dynamics123.
