NABE Forecast Lifts U.S. Economic Growth in 2024 after Minimal Gain in 2023
by:Tom Moeller
|in:Economy in Brief
Summary
- Growth in consumer spending should be slow & steady.
- Housing starts are predicted to decline this year then rise next year.
- Vehicle sales should improve this year and next.
- Price inflation is expected to slow.
The National Association for Business Economics forecast for real GDP growth in 2024 of 1.9% (Q4/Q4) compares to 0.3% estimated earlier. For 2023, expected growth of 0.3% was unchanged. These gains follow a 0.9% rise in 2022. Quarterly, GDP is expected to hold steady in Q1’23 then rise 0.1% in Q2'23, increase 0.2% in Q3 and 1.1% in Q4.
Personal consumption expenditures are forecast to grow 1.3% this year and 1.3% in 2024, after a 2.8% gain in 2022. Business fixed investment is expected to rise 0.9% this year and 1.4% in 2024, following a 3.8% rise in 2022. An expected decline in residential investment this year of 14.2% should be followed by a 1.9% rise in 2024; all coming after a 10.7% decline in 2022. After falling 0.6% in 2022, government spending should rise 1.8% in 2023 then increase 1.0% in 2024.
The net export deficit is expected to shrink to $1.231 trillion in 2023 from the record $1.357 trillion in 2022, then marginally narrow to $1.217 trillion in 2024. Exports should rise 3.0% this year, then gain 3.6% in 2024. Imports are expected to decline 1.0% this year then rise 2.9% in 2024. Inventories are expected to rise $37 billion in 2023 after a $125 billion 2022 gain, then rise $40 billion in 2024.
Housing starts are forecasted to decline to 1.31 million in 2023 from 1.55 million in 2022, then rise to 1.35 million units in 2024. Light vehicle sales are projected to rise to 14.8 million this year from 13.8 million in 2022, then improve to 15.5 million in 2024. Sales will remain below the 2016 peak of 17.5 million. An average monthly gain in payroll employment of 61,000 in 2023 compares to 401,000 in 2022; it should then rise to 102,000 in 2024. Expectations for the unemployment rate place it at 3.9% this year compared to 3.6% in 2022; then it is expected to rise further to 4.4% in 2024.
Inflation pressures should ease. After rising 7.1% (Q4/Q4) in 2022, the gain in the Consumer Price Index should moderate to 3.0% in 2023 and 2.3% in 2024. Price inflation, as measured by the PCE price index, is expected to slow to 2.8% in 2023 and 2.2% in 2024, after surging to 5.7% in 2022. The chain PCE price index excluding food & energy is projected to slow to 3.0% in 2023 and 2.2% in 2024, after rising 4.8% in 2022. The cost of crude oil is expected to be $79 at the end of this year and stay at $79 per barrel by the end of 2024.
Interest rates are expected to decline. The forecasted 3.55% rate on a ten-year Treasury note at the end of this year compares to 3.88% at the end of 2022. The rate should decline further to 3.42% by the end of 2024. The Federal funds rate is projected to rise, however, to 4.88% by the end of 2023 from 4.375% at the end of 2022. The funds rate is forecasted to decline to 3.50% at the end of 2024.
After- tax corporate profits are predicted to decline 1.6% this year after rising 7.8% in 2022, then improve 2.5% next year. The expected Federal government budget deficit should fall to $1.185 trillion this year from $1.375 trillion in 2022, then total $1.250 trillion in 2024. The deficit hit a peak of $3.132 trillion in 2020.
The figures from the latest NABE report can be found in Haver's SURVEYS database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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