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| Consumer spending will drive US economic growth in 2024. (Source: Medium) |
This is a stronger growth rate than all previous forecasts. The full-year growth rate of the world's largest economy in 2023 is 2.5%.
Consumer spending will continue to drive the economy through 2024, economists forecast.
Another year of solid growth could help the economy achieve a soft landing, and policy actions by the Federal Reserve could bring inflation back to its 2% target without triggering a recession.
This outlook will keep the economy on track and growing further even without support from other sources of growth such as business investment, housing construction or foreign trade.
While falling inflation is starting to pay off, labor market strength is also a key factor in the consumer-centric outlook for 2024. Weekly jobless claims remain low, suggesting that companies are retaining workers.
Hiring has slowed, however. The combination of falling inflation and a weakening job market has investors betting the Fed will start cutting interest rates as soon as March 2024. Lower borrowing costs will support housing investment.
Business investment is likely to remain subdued as firms face a range of concerns amid weak foreign growth, uncertainty ahead of the November election and questions about the sustainability of domestic demand.
Still, early signs from the latest reports suggest consumers remain resilient.
A combination of household spending and government spending will continue to offset lackluster investment figures, some economists say.
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