NABE Keeps Slower GDP Growth Forecast for 2024 after Acceleration in 2023

The National Association for Business Economics revised forecast for real GDP growth (Q4/Q4) in 2024 of 1.0% compares to 1.1% made in October, after 2.6% growth in 2023, revised from 2.0%. These gains follow 0.7% growth in 2022. Quarterly GDP in 2024 is expected to slow to 0.7% in both Q1 and in Q2, 1.1% in Q3 and 1.5% in Q4.

Growth in personal consumption expenditures is forecast to decelerate to a little-revised 1.5% in 2024 from 2.2% in 2023. Forecasts for business fixed investment growth of 1.2% in 2024 and 4.1% in 2023 compare to 1.4% and 3.0%, respectively. An expected 0.1% gain in residential investment in 2024 compares to 1.1% expected earlier, following an unrevised 11.2% decline in 2023. Government spending should rise a little revised 1.5% next year after a 3.7% 2023 gain, revised from 3.2%.

The net export deficit is expected to shrink to $0.935 trillion in 2023 then rise to $0.954 trillion in 2024, revised from $1.229 trillion. Exports should rise 2.6% this year and 2.3% next year, revised from 2.0% and 2.0%, respectively. Imports are expected to decline 1.5% in 2023 and then recover 2.3% in 2024. Imports had been expected to decline 2.0% this year then rise 1.8% in 2024. Following $128.1 accumulation in 2022, inventories are expected to increase a raised $41 billion in 2023 and $29 billion in 2024.

Housing starts are expected to be marginally lower in 2024 at 1.36 million, but they have been trending lower since the 2021 peak of 1.60 million. Light vehicle sales should hold at a marginally changed estimate of 15.4 million next year. The average monthly gain in payroll employment next year should approach 41,000, revised from 42,000. The expected 222,000 payroll gain for this year compares to 192,000 expected previously. The expected unemployment rate next year of 4.2% was unchanged, and this year’s estimate was slightly changed to 3.7% from 3.6%.

Inflation pressures should ease. After rising 7.1% (Q4/Q4) in 2022, the gain in the Consumer Price Index should slow to 3.3% this year and to an unchanged forecast of 2.4% in 2024. Price inflation, as measured by the PCE price index, is expected to slow from 5.9% last year to an unchanged 3.1% in 2023 then to a little changed estimate of 2.3% in 2024. After rising 5.1% in 2022, the gain in the chain PCE price index excluding food & energy is projected to slow to unchanged forecasts of 3.5% in 2023 and 2.3% in 2024. The cost of crude oil was shaved to $80 per barrel at the end of this year and $79 per barrel by the end of 2024, revised from $80.

Interest rates are expected to be higher than the October forecast. The forecasted 4.10% on ten-year Treasury notes at yearend 2024 compares to 4.61% at the end of this year. These figures were raised from 3.80% and 4.14%, respectively. The Federal funds rate is forecasted to decline to 4.75% at the end of 2024, revised from 4.4% expected earlier.

After-tax corporate profits are predicted to decline 1.0% this year, revised from -3.7%, after rising 4.8% in 2022. Profits should improve an upwardly revised 2.1% next year. The expected Federal government budget deficit should narrow to $1.595 trillion next year from $1.695 trillion this year. 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.