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Monthly update of The Conference Board's forecast for the US economy
The US economy started 2024 on a softer note than anticipated as elevated inflation and interest rates continued to weigh on the economy. While we do not forecast a recession in 2024, we do expect consumer spending growth to cool further and for overall GDP growth to slow to under 1% over the Q2 to Q3 2024 period. Thereafter, inflation should gradually normalize to the Fed’s 2-percent target in 2025 as quarterly annualized GDP growth rises toward its potential of near 2%.Interest rates should fall starting in late 2024 but may stabilize at levels exceeding the pre-pandemic average.
US consumer spending held up remarkably well in 2023 despite numerous headwinds. However, this trend has begun to wane. Real retails sales growth is in retreat and consumer confidence has fallen for several months. Gains in real disposable personal income growth are softening, pandemic savings have been exhausted, and household debt is increasing rapidly. Consumers are spending more of their income to service debt and auto loan and credit card delinquencies are rising quickly. Thus, we forecast that overall consumer spending growth will continue to slow in Q2 and Q3 2024 as households struggle to find a new equilibrium between income, debt, savings, and spending. While we anticipate labor market conditions t
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