A recession for us but not the U.S.? While the likelihood of a recession in 2024 appears to have decreased, many Americans might still feel the impacts of economic stagnation.
According to an October Wall Street Journal survey of business and academic economists, the probability of a recession in the coming year has decreased from 48% to 39%. Lower interest rates, decreasing gas prices, income growth, and a “zeroing-in” on the Fed’s 2% inflation target all suggest the chances of a recession are less likely.
However, the U.S. economy is not necessarily in the clear. Economic growth forecasts in 2024 look slightly bleak, at an estimated average of 1%. For reference, estimated growth in 2023 was 2.6%. The estimated long-run rate of economic growth is about 2%. Thus, while a recession is not likely, a “growth stop” is. The two share symptoms. Subsequently, payroll gains are expected to slow in 2024. Unemployment is expected to climb from 3.7% (in December 2023) to 4.3% by the end of 2024. This figure suggests the (net) number of unemployed will increase by about one million by the end of 2024.
Additionally, surveyed economists evidently think concentrated hiring trends are likely to continue into 2024, as the chart below reflects. The leisure-hospitality, government, and healthcare sectors seem poised to dominate in the employment-growth arena, as they did in 2023. Cyclical sectors (manufacturing, retail, and transportation) are expected to see weaker job growth. When employment gains are concentrated, the impacts of a slowdown are likely to be more widely distributed and felt by more Americans.
Even if a recession might not “technically” be in store, stagnation is still important to recognize. It is an economic nuance: things could be worse, but they could also be better.
Source: Harriet Torry and Anthony Debarros, The Wall Street Journal
Reade Ben is a policy analyst at the Manhattan Institute.
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