85% of economists predicted a recession for 2023 – it was a matter of when – summer or end of the year. What we experienced was more of a rolling recession. Different sectors were impacted at different times.
- The banking sector issues were contained using lessons learned from the 2008 banking crisis.
- Interest rates have slowed the housing market. More expensive loans are putting downward pressure on housing prices. People are reluctant to leave the low rates of their home loans. Building continues because there is a lack of housing. Building of multifamily homes (apartments) has increased significantly.
- The semiconductor industry slowed heavily in 2022. There were some lay-offs.
- Travel was dead in 2020 yet has rebounded in 2023. The strong dollar expands travel abroad.
- Layoffs have occurred across many industries with more occurring in tech and financial fields. Yet unemployment hovers at 4% – considered full employment.
What is the outlook for 2024?
The consumer continues to carry the economy although spending is slowing down. The stimulus packages have been absorbed and spent. The moratoriums for rent and student loan payments are over. Yet wages remain strong.
Capital spending will continue ramping up from the CHIPS Act and Infrastructure Investment and Jobs Act. This has encouraged building chip manufacturing in the US. Infrastructure Investment and Jobs Act has focused on infrastructure such as upgrading the US power grid. This will have a ripple effect across the economy.
Artificial Intelligence will bring growth and not just in the tech sector. As AI gets applied, industries will see improvements in production and operations.
Innovation has always been a strength of the US economy. It will continue to bring growth. Although the growth may be sluggish this year – 2% GDP is predicted by many economists.
2024 is an election year which usually makes investors anxious; markets can be volatile.
The stock market could be boring this year – a more normal year. Boring could be good after years with COVID shutdowns, runaway inflation and multiple interest rate hikes.