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Monthly update of The Conference Board's forecast for the US economy
GDP Growth to Continue to Slow in 2024 The US economy is expected to continue to lose momentum near-term as high prices and elevated interest rates sap domestic demand. Real GDP growth slowed dramatically to 1.4 percent quarterly annualized in Q1 2024 (from 3.4 percent in Q4 2023), and probably expanded at a clip not much faster than this in Q2. While we do not forecast a recession in 2024, we do expect consumer spending to cool further and real GDP growth to decelerate to around 1 percent quarterly annualized in Q3 2024.
Faster Activity Likely Later this Year and in 2025
GDP growth should pick up later in 2024 as inflation subsides and the Fed first signals and then actually cuts interest rates. In 2025, 2-percent inflation and somewhat lower interest rates should levitate real GDP growth to its potential near 2 percent. Nonetheless, the timing and pace of interest rate cuts remains highly uncertain and policy rates may ultimately land at levels exceeding the pre-pandemic average.
US Consumers Losing Steam
US consumer spending was robust in 2023 but slowed in the first half of 2024 as pandemic savings ran dry, and high prices and interest rates drained wallets. Real consumer spending on durable goods is in retreat amid elevated interest rates. Consumers are also choosing cheaper goods and services and spending less on discretionary items. The Conference Board Consumer Confidence Survey suggests increased concerns about the future, portending
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