Economic Outlook: A Strong Finish to 2024
As we approach the final quarter of 2024, our economic forecast is looking brighter than ever. We’re upgrading our GDP growth projection to 2.8%, up from 2.3%, driven by a robust consumer spending landscape.
Consumers Take Center Stage
Personal Consumption Expenditures (PCE) are expected to surge 3.4%, significantly higher than our previous estimate of 2.4%. This boost is largely attributed to low unemployment rates and the impressive consumer resilience displayed in the third quarter. With holiday retail sales anticipated to rise approximately 3% to nearly $1 trillion, it’s clear that consumers are ready to spend.
Services Sector Continues to Thrive
The massive services category, which accounts for around 45% of GDP, is expected to maintain its upward trajectory. The ISM Services PMI, a key indicator, reached a two-year high in October, underscoring the sector’s strength.
Housing Market: A Note of Caution
While the overall outlook is optimistic, higher mortgage rates are likely to make housing a bigger drag on growth than initially anticipated. This will partially offset our fourth-quarter GDP forecast.
Full-Year Estimates and Beyond
In light of these developments, we’re increasing our full-year 2024 GDP estimate to 2.6% from 2.5%. Looking ahead to 2025, we still anticipate 2.0% growth, with quarterly estimates of 1.7%, 1.7%, 2.3%, and 2.5%.
Supporting Indicators
Four key indicators, fueled by a diverse range of timely data, reinforce our assessment that the economy is thriving. The Federal Reserve Bank of Atlanta’s GDP Nowcast, the Federal Reserve Bank of New York’s Staff Nowcast, and the Weekly Economic Index tracked by the Federal Reserve Bank of Dallas all point to a healthy and growing economy.
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