Each year comes with a range of economic challenges. However, 2024 is especially critical as it is an election year, where the control over Congress and the White House are at stake. Policies associated with inflation, labor disruptions and more are highly significant in 2024. As Kavan Choksi Finance Expert says, at the moment, the U.S. economy is strong by all objective measures. It has low unemployment, robust GDP growth, and easing inflation.
Kavan Choksi Finance Expert sheds light on a few U.S economy trends for 2024
Over the last two years, predictions in regard to the future of the U.S. economy have considerably varied. At one point, many believed the country would land in a recession in 2023 but that did not happen. As per certain new predictions, inflation will continue to decrease throughout 2024, thereby prompting the Federal Reserve to cut interest rates. In the January of 2024, the Fed kept the rates locked in at 5.25% to 5.5%. This was due to the fact that the consumer price index was up 3.1% year-over-year, still higher than the Fed’s preferred rate of 2%. Certain leaders worry that keeping the rates high for such a long time can cause a dramatic reduction in business and consumer borrowing and spending. Both of these factors have the potential to send the country into a recession. Such concerns have additionally led the Fed to forecast three quarter-point rate cuts by the end of 2024, which shall push rates down to 4.6%.
Cuts in the Fed rates are likely to start in the summer of 2024, meaning that the economy shall grow slowly and see lower inflation. Officials from the International Monetary Fund (IMF) have increased their predictions for GDP growth in the US in 2024. While predictions showed just 1.5% annual GDP growth, the recent forecasts say the GDP could grow 2.1% in 2024. Analysts of Bank of America, however, are relatively less optimistic and predict a 1.4% growth in GDP in 2024.
Kavan Choksi Finance Expert mentions that consumer spending is responsible for more than two-thirds of total economic activity in the United States, and despite the tough conditions in 2023, it grew 2.5%. Household income and savings also grew in 2023. Nominal disposable income went up by almost 7% year-over-year in 2023, and consumer net worth was up more than 5%. Consumers hence also seem to be feeling confident about 2024.
High interest rates and low inventory have created concerns for the real estate sector for the past several months. If the Federal Reserve does lower rates this summer, the greater number of buyers could enter the market for single-family homes. However, it is also vital to remember that decreasing rates may not be enough to make a major change in the market. In fact, there is a chance that homeowners with optimal pre-pandemic mortgage rates will remain in their homes, keeping overall inventory low. When talking about the real estate sector of the U.S., one must keep the home-ownership rates of baby boomers in mind. Members of this generation own more than double the amount of real estate owned by millennial, and the rate at which they leave their homes could drastically impact inventory levels and real estate prices in the years to come.
