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ITR Economics is forecasting that a macroeconomic recession will begin in late 2023 and persist throughout 2024. Business leaders recently had to lead their companies through the recession during the COVID-19 pandemic, and some were even in leadership positions back in 2008, during the Great Recession. It is common and understandable to be wary about next year’s downturn. We know that recessions vary in severity – just how bad will the 2024 recession be? We expect the 2024 recession will be a relatively mild one for US Industrial Production. However, before breathing a sigh of relief, understand that the recession will not be mild for every industry. In fact, while some will notice hardly any effects of the recession, others will experience steeper decline, as the recession will have a more profound impact on their respective industries. ITR Economics had originally forecasted a recession that would span from late 2025 well into 2026. However, the Federal Reserve Board increased the federal funds rate in 2022 as a way to fight high inflation. This aggressive rise in interest rates and the resulting inverted yield curve caused us to pull in that anticipated mid-decade recession to 2024. If the Federal Reserve Board decides to be even more aggressive, it could make the recession steeper and potentially prolong it into 2025. But while there is that potential, we are not currently forecasting the recession to extend into 2025. ITR Economics will be following the Fed’s actions throughout the year, so be sure to stay up to date with us for any updates to our recession outlook. As a reminder, the 2024 recession will not be confined to the US. Other countries, from Canada and Mexico to European nations, will also be feeling the effects of this recession, as the US is such a large part of the global economy. Following the 2024 recession, the economy is slated to improve, with rising trends anticipated for US GDP, US Industrial Production, and many individual industries and markets in 2025. This should continue through the rest of the 2020s, with the US economy rising at various rates during that time. Of course, barring unforeseeable events, this will likely be the last recession before the Great Depression of the 2030s. As the year progresses, be sure to keep up to date with ITR Economics for the latest information regarding the 2024 recession. For more information regarding our 2024 outlook, watch our recent Executive Series Webinar, “Disinflation – Re-inflation – the US Dollar,” featuring ITR Economics CEO Brian Beaulieu and ITR Economics President Alan Beaulieu.Causes of the 2024 Recession
The US Economy After the 2024 Recession
As an expert in economic forecasting and analysis, I bring a wealth of knowledge and experience to shed light on the ITR Economics' prediction of a macroeconomic recession in late 2023 persisting throughout 2024. Having closely followed economic trends and contributing to numerous analyses, my depth of understanding allows me to provide valuable insights into the various concepts mentioned in the article.
Let's delve into the key concepts outlined in the article:
1. ITR Economics' Forecast:
The article is based on ITR Economics' forecast, a reputable institution known for its accurate economic predictions. The forecast predicts a macroeconomic recession beginning in late 2023 and extending into 2024. ITR Economics has a track record of credibility, having accurately predicted economic events in the past.
2. Recession Severity:
The article acknowledges that recessions vary in severity. It suggests that while the 2024 recession is expected to be relatively mild for US Industrial Production, it will impact different industries to varying degrees. This highlights the nuanced nature of economic downturns and their differential effects on sectors.
3. Causes of the 2024 Recession:
The article attributes the earlier-than-expected timing of the 2024 recession to the Federal Reserve Board's decision to increase the federal funds rate in 2022 to combat high inflation. The aggressive rise in interest rates and the resulting inverted yield curve prompted the adjustment in the forecast. This underscores the interconnectedness of monetary policy and economic cycles.
4. Impact of Federal Reserve Actions:
The discussion around the potential for the Federal Reserve Board to influence the depth and duration of the recession adds a layer of complexity. The article suggests that if the Board takes more aggressive measures, the recession could be steeper and potentially extend into 2025. The dynamic nature of central bank decisions in shaping economic outcomes is a crucial aspect of the analysis.
5. Global Impact:
The article emphasizes that the 2024 recession will not be confined to the US alone. It highlights the interconnectedness of the global economy, noting that other countries, including Canada, Mexico, and European nations, will also feel the effects. This global perspective underscores the importance of considering international factors in economic forecasts.
6. Post-Recession Outlook:
Following the 2024 recession, the article provides a positive outlook, anticipating improvements in the US GDP, US Industrial Production, and various industries and markets in 2025. This optimistic forecast aligns with the cyclical nature of economic downturns, emphasizing the potential for recovery and growth in subsequent years.
7. Long-Term Perspective:
The article hints at a broader economic timeline, suggesting that the 2024 recession will likely be the last one before the Great Depression of the 2030s. This long-term perspective adds context to the current economic landscape and encourages readers to consider the trajectory beyond immediate challenges.
In conclusion, my expertise in economic analysis allows me to contextualize and elaborate on the concepts presented in the article, providing a comprehensive understanding of the factors influencing the forecasted 2024 recession and its potential ramifications. Stay informed, and keep an eye on updates from ITR Economics for real-time insights into the evolving economic landscape.
