The US mainstream media's consensus is that the nation dodged a recession in 2023 with the worst of inflation being behind it. The US economy grew 4.9 percent in the third quarter, driven by robust consumer and government spending.
However, economists interviewed by The Epoch Times (ET) predict a significant slowdown in the coming months with some even hinting at a recession before the 2024 election. Per the Conference Board, a nonprofit business think tank, the recession may arrive as early as the first half of 2024. For his part, CEO of JPMorgan Chase Jamie Dimon warned that the US economy is "sugar high" from stimulus money and the Fed's previous quantitative easing.
"Many analysts expect the upcoming election to be a significant source of uncertainty and anxiety around the economy," the media outlet stated.
When it comes to inflation, it could continue to fall in 2024 but the path to the 2% threshold will probably be bumpy, analysts say. Meanwhile, American consumers are still paying 18% to 20% more for "just about everything," the media argued. According to the latest Bankrate survey, a staggering 63% of Americans don't believe they will see any improvement in their financial situation in 2024.
At the same time, cautious optimism in the jobs market for 2024 is marred by forecasts that hiring may slow significantly compared to the previous two years, which could result in an increase in the unemployment rate by the end of the year, the report claimed. Indeed, hiring has already cooled off from the start of 2023.
The Fed has resorted to interest rate hikes 11 times since March 2022. Per JPMorgan, the US central bank could begin cutting interest rates in the second half of 2024.
ET cites Stoyan Panayotov, a financial advisor and founder of Babylon Wealth Management, who warns of two potential risks to the US economy.
"One is an unexpected geopolitical event that could cause a resurgence of inflation and global instability," Panayotov told the media outlet, citing the Ukrainian conflict and the Middle Eastern crisis. "The second risk is the Fed waiting too long to cut rates."
Fed's rate cuts could ease pressure on borrowing rates and economic growth. The media outlet pointed out that credit card and home equity line of credit rates climbed to all-time highs; mortgage rates mounted to a 23-year high, while new auto loan rates reached their record level in 16 years.
Still, one should not expect that the Fed's anticipated rate cuts will mean "a return to the near-zero levels that followed the 2008 financial crisis," according to the media. In this sense, interest rates will remain comparatively high for the foreseeable future.
The situation is especially delicate given that 2024 is an election year, per Panayotov, who expects a lot of stock market volatility ahead of election day.
"Second-term election years tend to be positive for the market historically. My expectation is that the stock market will return 8% to 12% in 2024, and we will have a bumpy ride," he said. "The market likes a divided government. Most likely, we see a lot of volatility preceding the elections and a relief rally as we get the results."