February 26, 2024

Economy will slow in 2024, economists see 50% recession odds: NABE


The U.S. economy, which is on tempo to develop 5.2% in the third quarter, is heading for a pointy slowdown subsequent yr, in accordance with the nation’s main economists.

“The NABE [National Association of Business Economics] Outlook Survey Panel anticipates stronger U.S. economic growth projections for 2023 than in the October Outlook survey, but panelists expect growth to slow to 1% between the fourth quarter of 2023 and the fourth quarter of 2024,” stated NABE President Ellen Zentner, chief U.S. economist at Morgan Stanley, in the group’s newest survey.

U.S. GDP is predicted to slow to 1.2% in the fourth quarter as tracked by the Federal Reserve Bank of Atlanta’s GDP Now, which was up to date on Dec. 1, citing a slowdown in development spending and manufacturing.

U.S. manufacturing registered its thirteenth straight month of contraction, slipping 0.9% in November.

401(K) HARDSHIP WITHDRAWALS ARE SURGING AS HIGH INFLATION SQUEEZES AMERICANS

workers at a manufacturing plant

Employees work on the meeting line on the Dakkota Integrated Systems manufacturing facility in Detroit. (Jeff Kowalsky/Bloomberg by way of Getty Images / Getty Images)

Much of the third quarter’s spurt was tied to summer time journey, which hit a document, in what was described as post-pandemic “revenge travel.” 

Also, customers spent on experiences equivalent to live shows, together with Taylor Swift’s Eras Tour, which ranked No. 1 by raking in practically $800 million gross, per Forbes, however these patterns doubtless didn’t proceed in the fourth quarter on the identical stage, economists say. 

TAYLOR SWIFT, BEYONCE JUICE 3Q GDP

Taylor Swift strums blue guitar during stop on her Eras Tour

Taylor Swift just lately made historical past with “Speak Now (Taylor’s Version.)” (Tom Cooper / Getty Images)

Even with a slowing economic system, fewer economists see a recession in the playing cards, with “three in four assigning a probability of 50% or less,” in accordance with the survey.

On Friday, the federal government’s report on November job progress is predicted to point out employers added 180,000 positions, barely above the prior month’s 150,000, whereas the unemployment charge is seen holding at 3.9%.

OCTOBER’S INFLATION BREAKDOWN: WHERE PRICES ARE RISING/FALLING

The following Tuesday consumer inflation is predicted to slide to three.1% whereas the core charge, which strips out unstable meals and vitality costs, is seen holding at 4%. Both stay elevated however off the height of inflation’s sizzling streak in the summer time of 2022 when the buyer value index hit 9.1%. The NABE survey additionally predicts inflation to proceed moderating.

“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,” stated NABE Outlook Survey Chair Mervin Jebaraj, director of the Center for Business and Economic Research on the University of Arkansas.

Updates on jobs and shopper inflation will be the final two main financial knowledge experiences heading into the Federal Reserve’s Dec. 13 assembly, the final of the yr. Currently, 98.8% of market contributors count on policymakers to maintain charges as is, in accordance with the CME’s FedWatch Tool.

FED’S FIGHT AGAINST INFLATION IS WEIGHING ON MIDDLE-CLASS AMERICANS

Fed Chairman Jerome Powell speaks during a press conference

Federal Reserve Chairman Jerome Powell (Chip Somodevilla/Getty Images / Getty Images)

Still, Federal Reserve Chairman Jerome Powell warned final week that policymakers might not be executed with their charge hike cycle.

“We are prepared to tighten policy further if it becomes appropriate to do so,” he stated in remarks.

FED CHAIR JEROME POWELL DELIVERS WARNING ON RATES

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 36245.5 +294.61 +0.82%
SP500 S&P 500 4594.63 +26.83 +0.59%
I:COMP NASDAQ COMPOSITE INDEX 14305.03233 +78.81 +0.55%

The market shrugged off the warning, with the Dow Jones Industrial Average and the S&P 500 hitting highs of 2023 final week.

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