The post-COVID-19 economy in the United States was expected to stop defying gravity and topple into a recession in 2023. Rather, the stock market surged in the country with the growing belief that the Federal Reserve was on track to wrestle down inflation without causing a downturn, which is a rare feat known as a “soft landing.” As Kavan Choksi Professional Investor says, at the moment the Fed is probably done hiking rates to fight inflation and can rate cuts in 2024, ultimately lowering the borrowing costs for consumers and businesses. After all, inflation has managed to slow down more dramatically than expected in the United States, thereby validating the Fed’s turnabout.
Kavan Choksi Professional Investor discusses certain forecasts and expectations for the U.S. economy in 2024
Looking into 2024, the economic conditions in the United States may modestly deteriorate, even though real GDP growth, as well as the pace of job gains is expected to stay positive. Inflation additionally is likely to decline to around 2.5%. The shift in Fed policy is vital to these forecasts, which was hinted at by the central bank in its 2023 its December meeting, from the rapid rise in interest rates that characterized the year. At the same time, the surge in inflation that occurred starting in 2022 is projected to become a trickle as 2024 progresses. However, this does not mean that economists believe things would return to the pre Covid-19 pandemic era of very low interest rates and inflation. Rather, the interest rates are expected to remain above the rate of inflation.
In 2024, the savers are likely to be for their prudence and long-term investing may return to favor after several years of momentum stock-picking. For the majority of Americans, the key difference in 2024 shall be the moderation in inflation. Subsequent to witnessing consumer prices spike to a 9% annual level of inflation in mid-2022, the level of inflation has gone down to around 3%. It additionally is expected to decline further in 2024, down to the mid-2% range or lower. While prices shall still be climbing up from inflated levels, the rate is likely to be closer to levels that are more in line with pre-pandemic history. Interest rates that peaked in 2023 are expected to go on a downward trajectory even if they settle at a higher level than before the pre-Covid-19 pandemic times.
As Kavan Choksi Professional Investor says, dynamics of falling inflation and robust employment can result in the notable gains in real disposable income for households in the United States. It can additionally be the difference between the solid expansion and a more modest pace of growth closer to 1%. Mortgage rates may settle in the 6% range or even go lower subsequent to a surge to 8% in 2023. This can improve the outlook for a housing market that has recently shown some improvements. Demographic changes are also likely to be at the forefront of demand in 2024 as baby boomers continue to sit on houses with 3% and below mortgage rates and older millennials enter the key time of their careers. The average age of a new homeowner now is 36, up three years from 2021.
