The US economy is in for a sharp slowdown in 2024 as a closely watched survey of top economists foresees stubbornly high inflation, a rise in unemployment and a 50% chance of recession.
A slew of headwinds will slow the current quarter’s Gross Domestic Product — a comprehensive measure of economic activity and performance — to a pace of 1.2%, according to the National Association for Business Economics’ latest Outlook Survey released on Monday.
That’s versus a 5.2% annualized rate during the third quarter, the Commerce Department reported — the fastest rate of expansion since the end of 2021. Adjusted for inflation, real GDP increased 2.1%.
Panelists foresee the GDP slowing even further, to 1%, between the fourth quarter of 2023 and the fourth quarter of 2024, NABE President and Morgan Stanley chief economist Ellen Zentner said in the survey, which was earlier reported on by Fox Business.
On the heels of the dismal data, of the 30-plus economists surveyed, one in four said they’re now forecasting a recession, assigning a probability of at least 50%, NABE reported.
The last time the US experienced a financial crisis was in 2008. At the time, of the economic downturn, the federal funds rate was 5.25% while inflation rose 4.1% on an annual basis, per the Consumer Price Index.
Now, inflation isn’t slowing as quickly as the Fed has hoped, and remains well above central bankers’ goal at 3.2%. That’s a trend that will likely remain entrenched during the coming year, according to the survey.
“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.
Meanwhile, the Bureau of Labor Statistics last month released a weaker-than-expected October jobs report, when the economy only added 150,000 positions — as the unemployment rate came in above the Fed’s 3.8% year-end forecast, at 3.9%.
When November job data comes out on Friday, employers are expected to have added 180,000 positions, while unemployment is expected to hold at 3.9%.
The Federal Reserve Bank of Atlanta’s GDPNow forecasting model attributed the impending economic slowdown to a decline in construction spending and manufacturing as labor costs have surged and productivity has waned.
In New York, construction has been hindered by the precipitous 421a property tax exemption, which was given to real estate developers building new multifamily residential housing buildings in New York City before it expired in June 2022.
A lack of 421a, coupled with high borrowing rates, have pumped the brakes on new development.
An economic slowdown is also likely on the horizon as Taylor Swift’s blockbuster concert, “Eras Tour,” leaves the US.
Since Swift’s three-hour show kicked off in March in Arizona, loyal Swifties have shelled out so much for tickets and hotel rooms that the show has spurred growth in the economy of each of the cities it’s stopped at.
In Pittsburgh, an estimated 24,000 hotel rooms were booked at “premium” prices by fans making the “Eras Tour” pilgrimage back in June for the three-hour set, while tourists drummed up more traffic than usual for local businesses, from parking garages to restaurants.
While Swift’s concert continues its 100-plus-city trot around the globe, Beyonce’s “Renaissance” concert has also drawn a slew of fanfare as its embarked on a 56-stop world tour.
The economy will surely miss the so-called “Taylor Swift effect” after the 33-year-old songstress returns stateside to take her final Eras Tour bow in Indianapolis, Ind., in November 2024.
Beyonce, meanwhile, concluded her Renaissance tour on Oct. 1 in Kansas City, Mo.
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