The 2024 economy could be shockingly normal
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Illustration: Sarah Grillo/Axios
The economy in 2024 is on track to be described with a word that hasn't been applicable yet this decade: Normal.
Why it matters: The extraordinary stresses of a pandemic, inflation, war, and the onset of tight money over the last four years have created a collective sense of an economy unmoored. But there is good reason to think 2024 will give way to something less chaotic.
- Pandemic-disrupted supply chains are pretty much righted. Inflation is already back near normal levels. Labor shortages have eased. The Federal Reserve is poised to cut interest rates next year.
What they're saying: This forecast of a normal economy — simultaneously dodging the pain of high inflation, high interest rates, and high unemployment — isn't some remote pipe dream. It's the answer you get when you ask all kinds of decision-makers what they think is most likely.
- It's the answer we got when we asked about 600 Axios Macro readers how they expect the economy to perform in 2024. They put 25% odds on a 2024 recession, down from 50% a year earlier.
- It's also the answer from 141 CEO's of America's biggest companies. And panels of professional economic forecasters. And government agencies that project these things.
- "You're seeing so many of the indicators coming back to normal," Fed chair Jerome Powell said at a press conference this month. (He did caveat: "not all of them.")
Context: Normalcy would be a radically different experience from the rest of the 2020s.
- The pandemic started in March 2020, unleashing mass unemployment, closure of major industries, and trillions in government stimulus efforts.
- In 2021, inflation soared amid a bumpy reopening. In 2022, Russia's invasion of Ukraine disrupted global commodity markets, and inflation peaked as global central banks began their most aggressive campaign of interest rate hikes in four decades.
- In 2023, the economy has been experiencing the pain set off by those events, with high interest rates causing everything from bank failures to tech industry layoffs to a dysfunctional housing market.
State of play: Many of the disruptions set in motion by the pandemic just took time to heal. Companies have reworked their supply chains, and the supply of labor has risen as more Americans choose to work and immigration rebounded from pandemic lows.
- With inflation on the way down, Fed officials now anticipate cutting interest rates three times in 2024 — and financial markets think there will be even bigger moves.
The bottom line: If the last four years have taught us anything, it is about the world's unpredictability.
- Nobody can rule out another surprise disruption that rips apart this forecast of normalcy.
- But a boring, solid economy could be just what Americans need to feel better about the world, and the stars may be lining up to provide exactly that.
