The state of the U.S. economy has seen many fluctuations in recent years, especially following the pandemic. While we saw some improvement so far in 2023, The Conference Board is predicting the GDP will fall to 0.8% in 2024 from a 2.2% growth in 2023. So, what can businesses and consumers expect from the economy heading into 2024?
According to The Conference Board, the beginning of next year is likely to see a shallow recession due to factors such as rising inflation, high interest rates, increased consumer debt, lower government spending, student loan repayments resuming, and dissolving pandemic savings.
On the business side, investment slightly increased in the second quarter of 2023 due to a rise in spending on equipment, but they project it may slow down as interest rates continue to rise and US consumption slows. Predictions say that residential investment will continue to reduce later this year but see an increase in 2024 with lower interest rates and high demand.
The Conference Board has also stated that consumer spending in 2023 has been quite strong despite inflation and interest rates, but they project it will start to slow with the patterns of dissolving pandemic savings and increased debt. This month has also geared up changing student loan repayment requirements which will significantly affect many consumers and their spending habits for the remainder of the year and into early 2024. With that, The Conference Board predicts that inflation and interest rates will begin to slowly fall in the second part of 2024.
Government spending saw positive growth in 2023 due to infrastructure investment legislation, but the Fiscal Responsibility Act signed this year (which prevented the debt ceiling crisis) will start to limit government spending to finish out the year and into 2024.
As an overall projection for 2024, The Conference Board expects that our economy will inch closer to pre-pandemic volatility and growth rates, inflation closer to 2%, and lower Fed rates toward the end of the year, as well as the labor market to hold up relatively well.
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With a possible shallow recession incoming, interest rates impacting spending, and so on, it can be tricky to plan your financial health and stability with confidence, either as an individual or business owner. At Republic Bank, we’re here to help. Get in touch with one of our bankers for a consultation! Call 800-526-9127 today.