Research
June 07, 2024
Economic outlook
The widely forecasted recession didn’t materialize last year, and there is growing optimism that the economy will remain stout in 2024.
Resilient is the word that best described the economy in 2023. The most widely forecasted recession in history never materialized, despite the Federal Reserve’s efforts to stamp down decades-high inflation by slowing the economy. Indeed, most employers looked through the volatility, with payrolls expanding by more than 3 million jobs.
As the calendar turned to 2024, there was a renewed sense of optimism that consumers will continue to drive growth in the economy. However, the business cycle is not dead, and eventually there will be sand in the gears of this extended economic expansion.
While an economic slowdown during the second half of 2024 is probable, it doesn’t mean that a recession is inevitable. Given its underlying strength during the first 4 months of the year, the expectation is for the national economy to continue expanding throughout 2024.
This article presents the latest trends in key economic indicators as well as an outlook for the year ahead. Visit this page throughout the year for the Association’s latest projections for the U.S. economy.
Job growth remains solid
Employers continued to expand payrolls at a healthy pace as the calendar turned to 2024. The national economy added more than 1.2 million jobs during the first 5 months of 2024 – translating to an average increase of 248k jobs each month. That was essentially on par with the average monthly increase of 251k jobs during 2023.
Job growth varies by state
While the national economy is nearly 6 million jobs (or 3.9%) above pre-pandemic employment levels, some states have yet to fully recover from early-pandemic job losses. Employment levels in states like Idaho (+12%), Utah (+11%), Nevada (+10%), Florida (+9%), Texas (+9%) and Arizona (+9%) are well above February 2020 readings. At the other end of the spectrum, the employment base in 6 states and the District of Columbia remains below pre-pandemic readings.
Unemployment rate remains historically low
The jobless rate ticked slightly higher in recent months, but continues to suggest that the economy is at or near full employment. The national unemployment rate stood at 4.0% in May, which followed 27 consecutive months below 4%. That was the longest period of sub-4% unemployment since the late 1960s, when the jobless rate also spent 27 months below 4%.
15 states have jobless rates below 3%
Labor market trends vary significant by state. Fifteen states have unemployment rates below 3% – led by North Dakota (2.0%), South Dakota (2.0%) and Vermont (2.1%). Meanwhile, California (5.3%), Nevada (5.1%) and the District of Columbia (5.2%) have jobless rates above 5%.
Economy projected to add more than 2 million jobs in 2024
Job growth remained healthy during the first 5 months of 2024, but growth is expected to slow during the second half of the year. The national economy is projected to add a net 2.2 million jobs during 2024, which would be down from the 3.1 million jobs added during 2023. An increase of 2.2 million jobs would be roughly on par with the annual employment gains during the 2016 to 2019 period.
Personal income growth expected to slow in 2024
After the income support programs enacted during the pandemic ran their course, household income was buoyed by the healthy labor market. Looking ahead, wage growth is expected to remain elevated in historical terms, but decelerating employment gains will likely dampen the increase in aggregate income. Disposable personal income – a key driver of restaurant sales – is projected to increase at an inflation-adjusted rate of 1.7% in 2024. While still positive, that would be down from a solid 4.2% gain in 2023.
Inflation is moderating
After reaching a peak of 9.1% in mid-2022 – the strongest 12-month increase in 4 decades – growth in consumer prices moderated in the months that followed. By May 2024, the 12-month inflation rate stood at 3.3%. That was down significantly from the elevated 2022 levels, but remained above the Fed's 2% target. Looking ahead, the expectation is that 12-month inflation will resume trending lower and be in the sub-3% range by the end of 2024. That would translate to a 2.9% CPI increase on an average annual basis, the smallest annual gain since 2020 (1.2%).
Economy will expand at a moderate pace in 2024
Overall, the expectation is that the U.S. economy will continue to grow at a moderate pace in 2024. Real Gross Domestic Product (GDP) – the value of goods and services produced in the United States – is projected to increase at a 2.4% rate in 2024. Although GDP growth will be similar to 2023 on an average annual basis, there will likely be at least 2 quarters of sub-2% growth in 2024.
As the calendar turned to 2024, there was a renewed sense of optimism that consumers will continue to drive growth in the economy. However, the business cycle is not dead, and eventually there will be sand in the gears of this extended economic expansion.
While an economic slowdown during the second half of 2024 is probable, it doesn’t mean that a recession is inevitable. Given its underlying strength during the first 4 months of the year, the expectation is for the national economy to continue expanding throughout 2024.
This article presents the latest trends in key economic indicators as well as an outlook for the year ahead. Visit this page throughout the year for the Association’s latest projections for the U.S. economy.
Job growth remains solid
Employers continued to expand payrolls at a healthy pace as the calendar turned to 2024. The national economy added more than 1.2 million jobs during the first 5 months of 2024 – translating to an average increase of 248k jobs each month. That was essentially on par with the average monthly increase of 251k jobs during 2023.
Job growth varies by state
While the national economy is nearly 6 million jobs (or 3.9%) above pre-pandemic employment levels, some states have yet to fully recover from early-pandemic job losses. Employment levels in states like Idaho (+12%), Utah (+11%), Nevada (+10%), Florida (+9%), Texas (+9%) and Arizona (+9%) are well above February 2020 readings. At the other end of the spectrum, the employment base in 6 states and the District of Columbia remains below pre-pandemic readings.
Unemployment rate remains historically low
The jobless rate ticked slightly higher in recent months, but continues to suggest that the economy is at or near full employment. The national unemployment rate stood at 4.0% in May, which followed 27 consecutive months below 4%. That was the longest period of sub-4% unemployment since the late 1960s, when the jobless rate also spent 27 months below 4%.
15 states have jobless rates below 3%
Labor market trends vary significant by state. Fifteen states have unemployment rates below 3% – led by North Dakota (2.0%), South Dakota (2.0%) and Vermont (2.1%). Meanwhile, California (5.3%), Nevada (5.1%) and the District of Columbia (5.2%) have jobless rates above 5%.
Economy projected to add more than 2 million jobs in 2024
Job growth remained healthy during the first 5 months of 2024, but growth is expected to slow during the second half of the year. The national economy is projected to add a net 2.2 million jobs during 2024, which would be down from the 3.1 million jobs added during 2023. An increase of 2.2 million jobs would be roughly on par with the annual employment gains during the 2016 to 2019 period.
Personal income growth expected to slow in 2024
After the income support programs enacted during the pandemic ran their course, household income was buoyed by the healthy labor market. Looking ahead, wage growth is expected to remain elevated in historical terms, but decelerating employment gains will likely dampen the increase in aggregate income. Disposable personal income – a key driver of restaurant sales – is projected to increase at an inflation-adjusted rate of 1.7% in 2024. While still positive, that would be down from a solid 4.2% gain in 2023.
Inflation is moderating
After reaching a peak of 9.1% in mid-2022 – the strongest 12-month increase in 4 decades – growth in consumer prices moderated in the months that followed. By May 2024, the 12-month inflation rate stood at 3.3%. That was down significantly from the elevated 2022 levels, but remained above the Fed's 2% target. Looking ahead, the expectation is that 12-month inflation will resume trending lower and be in the sub-3% range by the end of 2024. That would translate to a 2.9% CPI increase on an average annual basis, the smallest annual gain since 2020 (1.2%).
Economy will expand at a moderate pace in 2024
Overall, the expectation is that the U.S. economy will continue to grow at a moderate pace in 2024. Real Gross Domestic Product (GDP) – the value of goods and services produced in the United States – is projected to increase at a 2.4% rate in 2024. Although GDP growth will be similar to 2023 on an average annual basis, there will likely be at least 2 quarters of sub-2% growth in 2024.