Daily Management Review

In 2023, The US Averted A Recession. How Do Things Look In 2024? These Are The Predictions Made By Experts


In 2023, The US Averted A Recession. How Do Things Look In 2024? These Are The Predictions Made By Experts
Predictions regarding 2023 were almost unanimous: a recession was on the horizon.
As the year draws to an end, the anticipated economic slowdown has not materialised.
What then awaits us in 2024?
Experts suggest there may still be a chance for an economic downturn.
The forecast is predicated on the same elements that led analysts to expect a decline in 2023. The Federal Reserve has increased interest rates due to the recent surge in inflation.
A recession is defined as two consecutive quarters of negative growth in the gross domestic product. Usually, that dynamic has set off a recession.
Even in 2024, there are optimistic expectations that can be avoided. Notwithstanding the dangers to the downside, Bank of America is forecasting a gentle landing as opposed to a recession.
As to a December study conducted by the National Association for Business Economics, 76% of economists stated that they think there is a 50% likelihood or less of a recession in the next 12 months.
A "good possibility" exists that there won't be a recession in 2024, according to a former president of the Dallas Fed.
According to Raymond James' chief investment officer Larry Adam, "our base case is that we have a mild recession."
The company projects that the second quarter will see the start of this slump, which could be "the mildest in history."
Forty percent of the NABE economists who see a decline in the projection see it starting in the first quarter, while thirty-four percent predict it will happen in the second.
Those in America who have suffered from high prices due to growing inflation could believe that a slump has already begun.
Up to that time, according to a recent MassMutual survey, 56% of respondents claimed the economy was already in a recession.
The end of 2023 brought attention to layoffs, which might continue in the upcoming year. In 2023, 29% of businesses laid off employees; however, 21% of businesses anticipate layoffs in 2024, according to Challenger, Grey & Christmas, an executive and business coaching organisation that also specialises in outplacement.
Experts advise following these three steps as a means of being ready for anything unexpected.
Cut down on the amount of debt you have
According to LendingTree, 34% of customers took into debt over the holiday season, which is a decrease from 35% in 2022.
The mean amount those buyers are withdrawing is $1,028, which is significantly less than $1,549 from the previous year and the lowest since 2017.
However, those loans are more costly due to higher interest rates. According to LendingTree, 30% of holiday borrowers had interest rates of 20% or more.
In the meantime, this year's credit card balances exceeded a record $1 trillion.
You can manage how much you pay on such loans by making certain decisions.
To begin with, LendingTree advises automating your monthly payments in order to prevent late fees and rate increases.
Try to reduce the amount you pay on any outstanding credit card debt you are carrying from month to month by taking advantage of a 0% balance transfer offer or applying for a personal loan. As an alternative, you may just attempt requesting a reduced interest rate from your present credit card provider.
Most importantly, choose a debt reduction plan and follow it through.
Stress-test your finances
Barry Glassman, the founder and president of Glassman Wealth Services and a certified financial planner, said earlier this year that a large part of how a recession may effect you depends on whether you are still employed. In addition, Glassman belongs to the Financial Advisor Council on CNBC.
He pointed out that a downturn in the economy could also result in lower wages for those who are still working.
As such, it's a good idea to assess your ability to withstand a reduction in income. He advised thinking about how long you could pay your bills if you lost your job, based on your savings and other available means.
Glassman advised "stress-testing your income against your ongoing obligations." "Ensure that you have a safety net of some kind."
Increase emergency funds
A small amount of extra cash saved can go a long way towards preventing an unanticipated expense or auto repair from breaking your budget.
However, surveys indicate that a large number of Americans would struggle to pay for a $400 bill with cash.
Experts advise automating your savings so that the money is withheld from your paycheck entirely.
Senior economist at Bankrate Mark Hamrick recently stated, "Even if we do get through this period relatively unscathed, that's all the more reason to be saving."
He said, "I haven't met anyone who saved too much money."
One more benefit of saving now is that the potential returns on your money are at their best point in fifteen years due to rising interest rates. Given that rate cuts by the Federal Reserve are anticipated to begin in 2024, those returns might not last.