As we approach the end of 2023, it’s time to examine the economic landscape in the United States. The projections for 2024 suggest a slowdown in economic growth, with some potential risks on the horizon.
Economic Performance in 2023
The U.S. economy has demonstrated resilience throughout 2023. Despite numerous challenges, consumer spending has remained robust, bolstering overall economic growth. According to the Conference Board, real GDP is expected to grow by 2.2 percent in 2023[i].
However, as we look towards 2024, there are several indicators suggesting that the economy might face some headwinds.
2024 Forecast: A Slowdown in Economic Growth
The Congressional Budget Office (CBO) predicts that real GDP will increase by 1.5 percent in 20242 – a considerable slowdown compared to 2023. This deceleration in economic growth could potentially drive up unemployment[ii].
The CBO’s projection aligns with the forecast from the Conference Board, which suggests that real GDP growth could fall to 0.8 percent in 2024.
Stock Market Outlook
On the stock market front, Wall Street analysts are projecting a rebound in S&P 500 earnings growth from just 1.1% in 2023 to 8.6% in the first quarter of 2024 and 12.2% thereafter[iii]. This growth could provide a much-needed boost to investor confidence, possibly offsetting some of the economic slowdown.
Risks to the U.S. Economy in 2024
Despite these positive projections for the stock market, there are still risks to consider. Economists estimate that household savings could be depleted by the first quarter of 2024[iv]. With savings running out, consumer spending, a significant driver of the U.S. economy, could be impacted.
In addition to depleted savings, the possibility of a recession in late 2023 or early 2024 cannot be discounted[v]. While economic growth was decent in 2023, the potential risks in 2024 suggest that we’re not out of trouble just yet.
As we move into 2024, it’s clear that the U.S. economy will face some challenges. The expected slowdown in GDP growth and potential risks such as depleted savings and a possible recession underlines the need for careful economic management and planning. However, the projected rebound in S&P 500 earnings growth provides some optimism for the year ahead.
It’s more important than ever for businesses and individuals to stay informed about economic trends and adjust their strategies accordingly.
[i] The Conference Board. (2023). U.S. Forecast. https://www.conference-board.org/research/us-forecast
[iii] USA Today. (2023). What’s Ahead for Stocks in 2024? https://www.usatoday.com/money/blueprint/investing/stock-market-outlook-2024/
[iv] Morgan Stanley. (2023). As Growth Trends Fade, What’s Ahead for 2024? https://www.morganstanley.com/ideas/economic-growth-trends-fade-2024
[v] Forbes. (2023). Recession Forecast Still Right For Late 2023 Or Early 2024. https://www.forbes.com/sites/billconerly/2023/08/05/recession-forecast-still-right-for-late-2023-or-early-2024/