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Monthly update of The Conference Board's forecast for the US economy
The US economy is set to end 2024 on strong footing after a year of surprisingly robust growth. However, myriad uncertainties loom over 2025, suggesting somewhat slower economic activity next year and material two-sided risks. The economy should expand at an upwardly revised pace of 2.7% year-over-year in 2024 (from 2.6%) and 2.0% in 2025 (from 1.7%). US real GDP growth in 2026 should settle at its potential rate of 1.8%. Inflation is expected to stabilize at the Fed’s 2% target in Q4 2025, later than the original Q2 2025 estimate. Consequently, the Fed may achieve the neutral Fed Funds rate target range of 3.00-3.25 in October 2025, also several months later than originally anticipated.Strong End, Uncertain Beginning
Q4 2024 Growth Tracking Above Expectations
Real GDP growth for Q4 2024 is revised significantly higher, from a lackluster 0.9% Q/Q annualized to 2.0%. The upgrade to real GDP growth largely reflects persistent evidence of strong consumer spending in October despite hurricanes that impacted large swaths of the US, and robust holiday sales. Notably “Black Friday” and “Cyber Monday” sales reportedly reached record highs and November retail sales were healthy. Household spending is being fueled by strong wage growth, increased after-tax income, higher savings, and upbeat confidence. The general improvement in consumer perceptions of the present situation and six months ahead, reflects a healthy labor market.
Nonresidential investment in machinery and equipment, IP, and infrastructure and factory building likely was strong, along with the contribution from government from industrial policies and reshoring. Residential investment pr
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