A new LendingTree report highlights what Americans can expect from the economy in 2024.
The U.S. economy is showing resilience in various aspects, with low unemployment, cooling inflation growth, and a steadily growing gross domestic product (GDP). However, challenges persist as inflation remains high, housing costs soar, debt delinquencies increase, personal savings rates are low, and household debt remains high.
While a total economic collapse is unlikely, some Americans may face difficulties due to elevated rates and higher-than-ideal inflation. LendingTree’s senior economist, Jacob Channel said, “Like any year, 2024 will doubtlessly be harder for some than it is for others.”
Key Predictions for 2024
1. Mortgage Rates May Dip Below 6.00%:
The average interest rate for 30-year fixed mortgages is anticipated to fall to around 6.00%, or even lower, by the end of 2024. Despite uncertainties, a stabilized mortgage market is expected, especially if inflation shows signs of improvement and the bond market remains less turbulent.
2. Inflation to Ease, but Not Hit Fed’s Target:
Year-over-year inflation growth is predicted to fall to the mid-2% range, indicating improvement compared to 2023. While not reaching the Federal Reserve’s 2% target, this trend suggests a more stable pricing environment, reducing the likelihood of sudden and significant price spikes.
3. Housing Market to See Moderate Activity:
Lower mortgage rates might boost homebuyer demand, but affordability challenges will persist. The market is unlikely to reach the intensity of the pandemic era, and additional housing supply won’t cause drastic price movements. Real estate trends will vary across local markets.
4. Federal Reserve Expected to Cut Rates:
The Federal Reserve is anticipated to cut rates in 2024, likely starting closer to the summer. Gradual reductions are expected, signaling the Fed’s confidence in addressing inflation concerns and lowering borrowing costs for consumers.
5. Moderate Increase in Unemployment:
A slight rise in the unemployment rate by 30 to 50 basis points is projected as businesses and consumers navigate relatively high interest rates. Despite the increase, the unemployment rate is expected to remain within manageable levels.
6. U.S. Economy to Avoid Recession:
While economic growth may slow, a recession is unlikely to occur in 2024. The U.S. economy has demonstrated resilience, and even if growth moderates, it is expected to avoid significant contraction.
Potential Economic Positives and Negatives
Positives:
- Housing market unlikely to crash, supported by strong fundamentals.
- Inflation expected to decrease, moving towards the Fed’s target.
- Interest rates likely to stabilize or decrease, improving affordability.
- Wage growth to outpace inflation, providing relief to households.
Negatives:
- Housing remains expensive for many, despite potential rate decreases.
- Home sellers may face challenges due to lower demand.
- Savings rates may stay depressed, impacting financial stability.
- Total household debt remains high, potentially affecting consumer spending.
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