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

Nov. 8, 2024

By Delaney O’Kray-Murphy, EBRC Research Economist

Looming tariffs cast uncertainty on the forecast

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

The forecast was prepared prior to the US presidential election and does not include most of President-elect Trump’s policy proposals. The possibility of personal and corporate tax cuts combined with large tariffs and a possible trade war adds uncertainty to the near-term outlook.
The forecast encompasses the Fiscal Responsibility Act of 2023, along with current corporate tax laws and personal tax policies. Scheduled Social Security and Medicare benefits are paid beyond the projected exhaustion of those funds. The recently passed foreign aid package provides $95 billion of budget authority to respond to the situations in Ukraine, Israel, and the Indo-Pacific region, a quarter of which is projected to boost US GDP.
After a 50-basis point (bp) cut in September, the FOMC cuts rates by 25bp at both remaining meetings this year. The Fed then cuts at every other meeting in the first half of 2025, before cutting by 25bp at every meeting until reaching target by early 2026. The Fed’s balance sheet declines by about one-third.
Immigration growth is assumed higher over recent history than what is described by the Census. The faster growth is more closely aligned with estimates from the Congressional Budget Office.
Tariffs and trade agreements between the U.S. and China since 2017 are assumed to continue. The forecast includes the Biden administration’s 25%-100% tariffs on roughly $18 billion of imports of electric vehicles, batteries, solar panels, and other commodities.
Real foreign GDP contracted by 4.7% in 2020, rebounded to 5.6% in 2021, then slowed to 3.4% in 2022 and 2.0% in 2023. The forecast calls for it to moderate further in 2024 to 1.9%, followed by a rebound to 2.3% in 2025 and 2.4% in 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 to $71 per barrel in 2025 and $68 in 2026 before gradually rising to $76 by 2029.

The baseline forecast (summarized here) is assigned a 55% probability. The pessimistic scenario is assigned 25%, and the optimistic scenario is assigned the remaining 20%. These probabilities are unchanged from October.

After increasing by 2.5% in 2022 and 2.9% in 2023, the baseline forecast calls for real GDP growth to moderate to 2.7% in 2024 and drop to 2.0% in 2025. On a quarterly basis, the forecast calls for real GDP to increase through 2034 (no recession).

Headline inflation spiked in 2022 to 8.0%, then decelerated to 4.1% in 2023. It is forecast to slow again to 2.9% in 2024 and 2.1% in 2025. Inflation rises to 2.4% in 2026, driven by natural gas prices.

The unemployment rate peaked at 8.1% 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 forecast to rise to 4.0% in 2024 and 4.4% 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 1.6% in 2024 and 0.8% in 2025.

Housing starts surged in 2021 to 1.61 million units. Activity remained strong in 2022 at 1.55 million. Starts fell to 1.42 million in 2023 and are forecast to slow to 1.35 million in 2024 and 1.34 million in 2025, as interest rate increases take a toll on housing activity.

Exhibit 1 summarizes the November 2024 forecast from S&P Global. Exhibit 2 shows the October 2024 projections and Exhibit 3 shows the difference.