The economy will continue to expand in 2024 despite rising unemployment, according to a Dec. 6 CliftonLarsenAllen economic forecast.
The hour-long webinar included Managing Principal for Investments Chris Dhanraj and Managing Principal of Industry Susan Roberts. They did not predict a recession to strike. Though Dhanraj and Roberts expect the current 3.9 percent unemployment rate to rise, they say that will provide much needed slack in the labor market and allow for more employees to change jobs.
Inflation, which had been negative over the last couple of decades, reached 9.1 percent in June 2022 but has since fallen to 3.1 percent. Roberts expects inflation to continue falling closer to its historical average of 2.7 percent.
Dhanraj and Roberts said Real GDP, which increased at an annual rate of 5.2 percent in the third quarter, will continue to expand at between 2 percent and 3 percent next year. Though the housing market has weakened amid high interest rates, Roberts said that softening has signaled a return to average from historically high figures.
Roberts said interest rate-sensitive industries such as automobiles and commercial real estate have been harder hit than more service-oriented sectors. Dhanraj said real estate conditions are geographic-specific: While office real estate is facing challenges on the East and West coasts, some Midwest-based businesses are seeing a strong turnaround.
Other economic experts have differed on whether a recession will strike next year. According to J.P. Morgan’s Global Investment Strategists, U.S. economic growth could slow in the first half of next year but it will likely avoid a recession. “Higher bond yields and reasonable stock valuations mean that forward-looking returns seem more promising than they have been in more than a decade,” the firm stated.
Economists polled by Reuters recently predicted 1.2 percent U.S. GDP growth for 2024 on average. Though they said the Fed’s aggressive rate hike cycle will cause a slowdown, they differed on whether next year will also include a couple of quarters of economic contraction that might result in rate cuts.