NEW YORK — S&P Global Ratings now expects the U.S. economy to expand 1.5% in 2024 on an annual average basis — a slight rise from its September forecast.
The news suggests that the economy will be “cooling off but not breaking” across next year.
The S&P Global Ratings forecast for September put economic growth at 1.3% in 2024 and 1.4% in 2025. The latter figure is unchanged from the September forecast.
The good news? “Longer-run sustainable growth” of 1.8% is forecast for 2026, S&P Global Ratings says in a newly released report.
The not-so-good news? “Businesses are facing higher costs of capital, which will lower capital expenditures and hiring,” S&P Global Ratings concludes. Furthermore, the unemployment rate will likely rise in the next two years to 4.6%, from 3.9%. That’s slightly above the longer-run steady state.
Finally, S&P Global Ratings believes that as normalization in the product and labor markets continues, disinflation will endure, “albeit unevenly.” It shares, “We continue to think that the Federal Reserve will hike federal funds rate by another 25 basis points (likely December) before cuts start in mid-2024.”
