S&P Global U.S. Forecast Update February 2024

Feb. 9, 2024

By Delaney O’Kray-Murphy, EBRC Research Economist

U.S. real GDP forecast revised up from 1.7% to 2.4% in 2024

S&P Global have released their February 2024 forecast update for the U.S. The current forecast is based on the following assumptions:

The forecast encompasses the Fiscal Responsibility Acts of 2023, along with current corporate tax laws and personal income tax policies. Notably, pandemic-era programs, such as the Child Tax Credit in January, the 15% increase in SNAP in March, and the 6.2 percentage point increase in Medicaid throughout 2023, have expired as scheduled. Forbearance on student loans concluded on August 31, with payments resuming on October 1. Scheduled Social Security and Medicare benefits are paid beyond the projected exhaustion of those funds.
The Fed is assumed to maintain its policy rate at a range of 5.25%-5.50% until May. Starting in May, the Fed cuts its policy rate four times in 2024, to the range of 4.25%-4.50% by December, and eventually to 2.50%-2.75% by early 2026. The Fed’s balance sheet declines by about one-third.
Tariffs and trade agreements between the U.S. and China since 2017 are assumed to continue.
Real foreign GDP contracted by 4.7% in 2020. Growth rebounded to 5.6% in 2021 and then decelerated to 3.4% in 2022. The forecast calls for it to slow in 2023 to 2.0% and 2024 to 1.9%, then rebound to 2.5% by 2026.
The price of Brent crude oil rose to $113 per barrel in the second quarter of 2022, up from $80 per barrel in the fourth quarter of 2021. The price is forecast to drop unevenly to $76 per barrel in 2025, rebound to $87 by 2027, then rise roughly at the rate of inflation.

The baseline forecast (summarized here) is assigned a 55% probability. The pessimistic scenario is assigned 30% and the optimistic scenario is assigned the remaining 15%. These percentages are unchanged from January.

After increasing by 1.9% in 2022 and 2.5% in 2023, the baseline forecast calls for real GDP growth to moderate to 2.4% in 2024 and slow to 1.6% in 2025. On a basis quarterly, the forecast calls for real GDP to increase through 2033 (no recession).

Headline inflation spiked in 2022 to 8.0%, then decelerated to 4.1% in 2023. It is forecast to slow again to 2.8% in 2024 and 1.9% in 2025.

The unemployment rate peaked at 8.1% for the year in 2020 but fell to 5.4% in 2021 and again to 3.6% in 2022. It remained at 3.6% in 2023 and is forecasted to rise to 3.9% in 2024 and 4.3% in 2025.

Nonfarm payroll jobs nationally dropped by 5.8% in 2020 but rebounded with growth of 2.9% in 2021 and 4.3% in 2022. Jobs rose by 2.3% in 2023 and are forecast to slow to 1.3% in 2024 and 0.1% in 2025.

Housing starts surged in 2021 to 1.61 million units. Activity remained strong in 2022 at 1.55 million. Starts fell to 1.41 million in 2023 and are forecast to remain at 1.41 million in 2024 before slowing to 1.35 million in 2025, as interest rate increases take a toll on housing activity.

Exhibit 1 summarizes the February 2024 forecast from S&P Global. Exhibit 2 shows the January 2023 projections and Exhibit 3 shows the difference.