A recent survey conducted by the National Association for Business Economics has revealed a more optimistic outlook for the U.S. economy in 2024. Economists are now predicting a growth rate of 2.2% after adjusting for inflation, a significant increase from the previous forecast of 1.3% made just a few months ago.
The unexpected strength of the economy has defied earlier concerns of a looming recession, despite the Federal Reserve's efforts to control inflation through high interest rates. The job market and household spending have remained resilient, contributing to the positive economic momentum.
Factors contributing to the upgraded forecast include increased government and household spending. Economists have also revised their estimates for job gains in 2024, anticipating a significant increase compared to the previous year.
Inflation, which peaked two summers ago, has been on a downward trend, providing further support to the economy. While prices remain elevated, the rate of increase has slowed, prompting expectations of interest rate cuts by mid-June.
The Federal Reserve has indicated its intention to implement multiple rate cuts throughout the year to stimulate economic growth and boost investment returns. However, the full impact of these rate changes may take time to materialize, with past rate hikes potentially posing a risk of recession.
According to the survey, high interest rates were identified as the most significant risk to the economy by 41% of respondents, overshadowing concerns about credit crunches or geopolitical tensions in regions like Ukraine and the Middle East.
