Economic Outlook U.S. Q4 2024: Growth And Rates Start Shifting To Neutral

S&P Global Ratings expects the U.S. economy to expand 2.7% in 2024 and 1.8% in 2025 (on an annual average basis). The growth forecasts are 0.2 and 0.1 percentage point higher, respectively, compared with our June forecasts, partly reflecting the impulse from financial conditions that turned more positive and partly on stronger core goods consumption than previously expected. On a year-end basis, we expect growth to come in at 2.0% in the fourth quarter of 2024, down from 3.1% in fourth-quarter 2023. Aside from continued sluggishness in the housing and manufacturing sectors, most recent activity indicators suggest economic growth momentum continues to run slightly above trend, though it has moderated since the fourth quarter of last year. The recent loosening

...- We continue to expect real GDP growth to slow from above-trend growth this year to below-trend in 2025, accompanied by a further rise in unemployment rate and lower inflation. - The Fed looks set to embark on a steady series of interest-rate cuts--we have penciled in policy rates to reach the terminal rate of 3.00%-3.25% by the end of 2025, with risks in both directions. - We view the upcoming gradual easing period as more of a preventative measure for growth from slipping too far below potential than instantly juicing the real economy. - We kept our probability of recession starting over the next 12 months unchanged at 25%. With consumption still healthy, for now, near-term recession fears appear overblown. S&P Global Ratings expects the U.S. economy to expand 2.7% in 2024 and 1.8% in 2025 (on an annual average basis). The growth forecasts are 0.2 and 0.1 percentage point higher, respectively, compared with our June forecasts, partly reflecting the impulse from financial conditions that...

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