Dec 21, 2023 - Economy

The consensus is in: Macro readers see a strong 2024 economy

Illustration of speech bubbles falling among glittering, gold confetti.

Illustration: Annelise Capossela/Axios

Solid growth. Jobs aplenty. Falling inflation. Low recession odds. That, in nine words, is the Axios Macro Consensus — what readers expect to see in the year ahead.

Why it matters: To the degree your outlook is shared by other consumers and business decision-makers, it bodes well for the economy. Much of last year's apprehension has evaporated this time around.

The details: Among the nearly 600 Macro readers who answered our call, the median participant put recession odds at 25%. The consensus figure was 50% this time last year.

  • The median entrant saw 2.5% GDP growth over the next year.
  • You saw the economy adding 195,000 jobs a month, which would be only a mild deceleration from 232,000 jobs a month added so far in 2023.
  • Your median expectation for the unemployment rate at the end of next year was 4% — barely above the current 3.7% and low by any historical standard.

By the numbers: Macro readers anticipate inflation of only 2.8% over the next year.

  • And we asked about the Consumer Price Index, which usually runs a bit hotter than the Personal Consumption Expenditures indicator the Fed targets. As a result, your 2.8% CPI expectation is only a few ticks above the 2% PCE inflation the Fed aims for.

State of play: That anticipation of falling inflation aligns with your expectation for Fed policy rates, which the median entrant saw falling to 4.5% by year-end, from about 5.4% now. Your projection roughly aligns with that of Fed officials themselves.

  • You see the 10-year Treasury yield falling further, to 3.5% next December from 3.91% Wednesday morning.

Between the lines: Your consensus forecast — falling inflation, monetary easing, continuing growth — would amount to a Goldilocks scenario for financial assets, justifying the stocks rally over the last few weeks.

Of note: It's not just reader consensus being rosy. There was also much less variance in the responses than one year ago.

  • Only 11 entrants, for example, forecast inflation of 4% or higher. Not 11% of entrants, 11 individuals!
  • One year ago, the standard deviation — a statistical measure of variance — in your projections for job growth was 266,000. This year, it's down to 54,000.

The bottom line: Not only do most Macro readers anticipate benign economic conditions in 2024 compared with a year ago, but the degree of consensus is stronger.

We asked our readers to predict the biggest economic surprise in 2024. Here is a sampling:

Many of you predicted the biggest shock would involve a potential recession.

  • Lomar, an investor, said: "We actually stick the soft landing without collapsing on jobs, though we see continued modest cooling." (Many others agreed.)
  • By contrast, economist Mike D. said there would be "a short and shallow recession."

T. Grant, an entrepreneur and business owner, said: "A majority of Americans finally understand the economy remains strong."

There were plenty of predictions about what the Fed does in 2024.

  • One Macro reader, JW, said the Fed will slash rates and "consumers will seize the opportunity of lower rates," which will stir inflation and the "Fed will raise rates again."

Mike, a business owner, predicted 2024 would be the year of the office comeback. Relatedly, Bill G. said "commercial office space comes back strong via repurposed uses."

  • Angel R. predicted more banking issues next year "due to commercial real estate loan defaults."
  • Jesse W. an economist, said the biggest economic surprise would be a shadow banking crisis: "Some hedge funds/PE funds reveal some big unrealized losses and the Fed has to step in to prevent contagion."

Two other topics were top of mind for readers: artificial intelligence and the 2024 elections.

  • Wilbert, an entrepreneur, said AI will impact GDP less than expected. Meanwhile, D. Naquin said that AI won't be "much of a factor."
  • On 2024, James V. predicted a "razor-thin" victory in the presidential election, in which the result is "too close to call.

Finally, this may be the prediction we most hope comes true: Doug, a financial industry professional, says in 2024 "a joint Taylor Swift/Beyonce world tour is organized to single handedly avert a recession."

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