US and global economy may face major challenges in 2024

Washington, Jan 2 (IANS) The US and the global economy may face major challenges in 2024 though they have proved to be surprisingly resilient in the past year. However, the strains of wars, still-elevated inflation and continued high interest rates could impact GDP growth rates.

“Chastened by an economy that outfoxed their predictions in 2023, economists are taking a cautious approach to 2024,” media reports said.

Global economists are calling for a consensus on a growth slow down, perhaps a mild recession, and an economy marked by lower interest rates and lower inflation. But a few are sticking their necks out, saying “the economy could be stronger than expected or that interest rate cuts could come sooner and be more frequent”.

“Looking at 2024, economic conditions are expected to deteriorate modestly, though real GDP growth and the pace of job gains are expected to remain positive, and inflation is expected to decline to around 2.5 per cent,” said Kevin Kliesen, a business economist and research officer at the Federal Reserve Bank of St. Louis.

“This outcome, should it occur, would seem to vindicate those who have long believed in the possibility of a soft landing for the economy,” he added.

The 2024 forecasts, especially the US economy, are based on a shift in the US Federal Reserve’s policy. The central bank hinted at its December that meeting it could halt interest rate hikes and even consider dropping them from the rapid rise in interest rates that characterised the last 18 months.

The surge in inflation that occurred in the beginning of 2022 is projected to become a trickle as 2024 progresses, reports said.

Economists don’t believe matters will return to the pre-pandemic era of extremely low inflation and interest rates, media reports said.

“We believe that interest rates will remain above the rate of inflation,” said Andrew Patterson, senior