The possibility of a recession in 2024 is a topic of concern, with indicators suggesting potential economic challenges.
India’s Finance Ministry has expressed concerns about uncertainties tied to elevated food and energy prices, along with geopolitical tensions, potentially leading to a recession in the year 2024.
Additionally, a finance conference prediction by Dougherty indicates that while the worst of inflation may be behind us, a mild recession could still occur in the second half of 2024.
Expert Predictions: Will There Be a Recession in 2024?
Different experts have different opinions on whether there will be a recession in 2024, based on their analysis of various economic indicators and trends. Here are some of the expert predictions:
- Aneka Beneby, portfolio manager and director at Julius Baer Group, a Swiss wealth management firm, said that she does not expect a recession in 2024, but rather a slowdown in growth. She said that the global economy is still recovering from the pandemic and the supply chain disruptions and that the inflationary pressures will ease as the demand and supply balance out. She also said that the central banks will be cautious in raising interest rates and withdrawing stimulus measures, to avoid triggering a financial crisis.
- Brian Moynihan, CEO of Bank of America, one of the largest banks in the United States, said that he is optimistic about the economic outlook for 2024 and that he does not see a recession on the horizon. He said that consumer spending and confidence are strong and that business investments and hiring are picking up. He also said that inflation is transitory and that the monetary policy will remain accommodative.
- James Lord, global head of currency at Morgan Stanley, a leading investment bank, said that he expects a recession in 2024, as the global economy will face a combination of higher interest rates, tighter fiscal policy, and geopolitical risks. He said that the inflation will persist and force the central banks to raise interest rates faster than expected and that the fiscal stimulus will fade and create a fiscal drag. He also said that geopolitical tensions, such as the China-US rivalry, the Iran nuclear deal, and the Russia-Ukraine conflict, will increase the uncertainty and volatility in the markets.
- Charlie Dougherty, senior economist at Wells Fargo, one of the largest banks in the United States, said that he does not foresee a recession in 2024, but rather a moderation in growth. He said that the economy will benefit from the vaccine rollout, the reopening of businesses, and the pent-up demand. He also said that the inflation will moderate as the supply chain bottlenecks are resolved and that the interest rates will rise gradually and remain low by historical standards.
- Thomas Hoenig, former president of the Kansas City Federal Reserve Bank, one of the 12 regional banks that make up the Federal Reserve System, said that he is concerned about the possibility of a recession in 2024, as the economy will face the consequences of the excessive debt and money creation. He said that the debt levels of the government, corporations, and households are unsustainable and that the money supply has grown too fast and distorted the price signals. He also said that inflation will be more persistent and damaging than expected and that the interest rates will have to rise sharply and cause a financial shock.
Factors That Could Contribute to a 2024 Recession
There are several factors that could contribute to a 2024 recession, depending on how they evolve and interact with each other. Here are some of the factors:
Chained Consumer Price Index (C-CPI)
This is a measure of the changes in the prices of a basket of goods and services that consumers buy, adjusted for the changes in their consumption patterns. The C-CPI is used to calculate the inflation rate, which affects the purchasing power and the cost of living of the consumers. The C-CPI has increased by 5.4% in October 2023, compared to the same month in 2022, reaching the highest level since 1990. This indicates that inflation is high and eroding the value of money.
Producer Price Index (PPI)
This is a measure of the changes in the prices of a basket of goods and services that producers sell, such as raw materials, intermediate goods, and finished goods. The PPI is used to gauge the cost pressures and the profit margins of the producers. The PPI increased by 8.6% in October 2023, compared to the same month in 2022, reaching the highest level since 1981. This indicates that the production costs are high and squeezing the profits of the producers.
This is a comparison of the economic performance and outlook of different countries and regions, such as the United States, China, Europe, Japan, India, and others. The international comparison can show the relative strengths and weaknesses of the economies, as well as the opportunities and threats they face. According to the International Monetary Fund (IMF), the global economy is expected to grow by 5.9% in 2023, and by 4.9% in 2024, but with significant divergences among the countries and regions. This indicates that the global economy is recovering from the pandemic but with uneven and uncertain prospects.
Impact on Consumer Habits
This is the impact of the economic conditions and inflation on consumer habits, such as spending, saving, borrowing, and investing. The impact on consumer habits can affect the aggregate demand and the economic growth of the economy. According to the University of Michigan, the consumer sentiment index, which measures the consumers’ confidence and expectations about the economy, has declined to 66.8 in November 2023, the lowest level since 2011. This indicates that the consumers are pessimistic and cautious about the economic situation.
Other Predictions and Statistics
There are other predictions and statistics that can help us assess the possibility of a recession in 2024, based on different models and methods. Here are some of them:
TD Securities Projected Monthly Probability
This is a projection of the monthly probability of a recession in the United States, based on a model that uses the yield curve, the unemployment rate, and industrial production as the predictors. The yield curve is the difference between the long-term and the short-term interest rates, which reflects the expectations of future economic conditions. The unemployment rate is the percentage of the labor force that is unemployed, which reflects the state of the labor market. Industrial production is the output of the manufacturing, mining, and utility sectors, which reflects the level of economic activity. According to TD Securities, the projected monthly probability of a recession in the United States is 12.7% in September 2024, and 14.2% in December 2024. This indicates that the risk of a recession is low, but rising.
Expert Opinions from Angelo Kourkafas, Ken Bell, Mark Steckbeck, Forbes Dixon, and Gerald Cohen
These are the opinions of some of the experts who participated in a survey conducted by The Motley Fool, a financial media company, on the question of whether there will be a recession in 2024. The survey asked the experts to rate the likelihood of a recession in 2024 on a scale of 1 to 10, where 1 means very unlikely and 10 means very likely. Here are some of the expert opinions:
- Angelo Kourkafas, investment strategist at Edward Jones, a financial services firm, rated the likelihood of a recession in 2024 as 4. He said that the economy is resilient and adaptable and that the inflation and interest rates will normalize as the supply and demand imbalances are resolved. He also said that the fiscal and monetary policies will remain supportive of economic growth.
- Ken Bell, chief investment officer at Aspera Financial, a wealth management firm, rated the likelihood of a recession in 2024 as 6. He said that the economy is vulnerable and fragile and that the inflation and interest rates will remain elevated and volatile as the central banks lose control of the monetary policy. He also said that the fiscal and monetary policies will create more distortions and imbalances in the economy.
- Mark Steckbeck, professor of economics at High Point University, rated the likelihood of a recession in 2024 as 7. He said that the economy is cyclical and unpredictable and that inflation and interest rates will increase and decrease in response to the changes in economic conditions. He also said that the fiscal and monetary policies will have limited effects and unintended consequences on the economy.
- Forbes Dixon, founder and CEO of Dixon Financial Group, a financial planning firm, rated the likelihood of a recession in 2024 as 8. He said that the economy is overheated and unsustainable and that the inflation and interest rates will soar and crash as the economic bubble bursts. He also said that the fiscal and monetary policies will exacerbate the economic problems and create a debt crisis.
- Gerald Cohen, senior economist at Moody’s Analytics, a provider of economic research and analysis, rated the likelihood of a recession in 2024 as 9. He said that the economy is doomed and inevitable and that inflation and interest rates will spiral and trigger a recession. He also said that the fiscal and monetary policies would be ineffective and counterproductive in preventing or mitigating the recession.
Will The United States Face A Recession In 2024?
The likelihood of the United States facing a recession in 2024 remains uncertain, with mixed signals across the broader economy. The effects of higher interest rates on consumers and businesses are still undetermined. Some experts suggest that the U.S. may avoid a recession until 2025, emphasizing the need for a more prolonged Federal Reserve approach. Conversely, there are predictions of a shallow recession in the first half of 2024, with expectations of a decline in GDP by the following year.