JANUARY 2, 2024 – ECONOMISTS FORESEE SOFT LANDING FOR 2024
As the economy moved ahead at a steady pace in 2023, inflation has pulled back faster than expected. The Federal Reserve raised interest rates eleven times since early 2022, and the effects of those increases seemed to have worked their way through the US economy without dire consequences. Not only is inflation slowing, but there have been cases of price deflation year-over-year, and the Fed’s goal of full employment held through the course of the year.
Fed Chair Jerome Powell recently stated he was “pleased with the progress” the economy has experienced, both on inflation and employment. Powell was especially pleased the economy cooled while avoiding large job losses that are ordinarily associated with fiscal tightening.
The Fed is forecasting an unemployment rate of 4.1 percent for 2024 and 2025, slightly higher than the current 3.7 percent. That is a slight improvement over their initial prediction of 4.4 percent, effectively saving 1.2 million jobs. Inflation is now at 3.1 percent, with the Fed forecasting 2.4 percent for 2024.
Some economists feel a mild recession is still a possibility for the second half of the year. But hopes are for the Fed to start rolling back interest rates by then, which could mitigate any economic pain.