Want to know how strong the economy will be in 2024? Well, it is all about jobs. A healthy economy creates more jobs and the more jobs created, the healthier the economy becomes because those with jobs spend more every month. In 2023, the economy was predicted to evolve into a recession. That never happened. Why? The economy created between 2.5 and 3.0 million jobs in 2023. That is an average of over 200,000 jobs per month. Analysts have indicated that somewhere between 100,000 and 150,000 jobs need to be created monthly to maintain steady growth.
Certainly, the pace of job creation has slowed somewhat since the beginning of 2023 when we added over 300,000 jobs per month during the first quarter of the year. However, after Friday’s announcement of 216,000 jobs created in December, we have added over 150,000 jobs during the last quarter of 2023. The low unemployment rate of 3.7% is an indication that the job market is still healthy going into 2024. As a matter of fact, the Federal Reserve would like the market to be a bit less healthy in order to ease the threat of inflation, so that they are more comfortable lowering interest rates as the year progresses.
Lowering interest rates will contribute to a healthier economy in 2024 as lower rates will encourage more consumer spending. Though, like the job market, the Fed would prefer consumer spending to grow modestly this year so that this spending does not exacerbate inflation. Thus, we see 2024 as a major balancing act. Moderate job and consumer spending growth will keep the economy healthy while inflation continues to improve. That would be the ultimate definition of the coveted “soft landing.” Our fingers are crossed for no recession or rekindling of inflation for 2024.
