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Two Views of 2024 – December 11, 2023

What does 2024 hold in store for the U.S. economy? As with many questions, the answer depends on your point of view. It’s entirely possible, and in fact common, for the same set of data to serve as the basis for very different conclusions.  

Such is the case with two outlook reports issued last week. On the one hand, you have a forecast from a group that has correctly predicted recessions in the past, such as the 2001 downturn and the pandemic-induced slowdown. That group now says the likelihood of an imminent recession has faded, although growth will slow.  

On the other hand, you have a highly regarded commercial real estate economist acknowledging that yes, the U.S. economy proved to be resilient in 2023. However, in the view of this economist, we’re already in the throes of a rolling recession, with some industries spared and others contracting.  

The first report is from the UCLA Anderson School of Management, which describes a similar, although not identical, pattern to what the economy saw between 1994 and 1996. “From January 1994 through March 1995, the U.S. economy was buffeted by a string of seemingly negative news, including rising interest rates and a sinking Treasury yield curve,” says the final UCLA Anderson Forecast for 2023. “The rising interest rates contributed to the bankruptcy of Orange County, California, and a 1995 government shutdown loomed.   

“All this negativity led some economists to forecast a recession, despite the fact that the data underlying the headlines indicated otherwise. Ultimately, the U.S. economy grew 4.0% in 1994, 2.7% in 1995 and 3.8% in 1996.”  

Fast forward to this year, and three potential crises—two in Congress and one stemming from labor strife in the auto industry—proved to be short-lived. “The backlog of durable goods orders continues to grow, and factory construction is soaring,” UCLA Anderson says. “Though core inflation is coming down slowly, the UCLA Anderson Forecast does not expect the Fed to increase the effective federal funds rate for the balance of the year. The Fed is expected to hold the rate where it currently sits until sufficient weakness in the economy (which Anderson economists forecast for mid-to-late 2024) results in some moderate rate reductions.”  

At Cushman & Wakefield, global head of forecasting Rebecca Rockey says in a video accompanying the firm’s 2024 U.S. Macro Outlook Report, “In our view, the full weight of monetary policy is yet to be realized.” Monetary policy works in “long and variable lags,” to use the parlance of the Federal Reserve, and some of the lagged effects are just beginning to show up in economic data.  

For example, credit card delinquencies are on the rise. “In addition, the leading economic indicators—the tried-and-true predictors—continue to point to weakness,” Rockey wrote in the report.   

Most notably, 10-year vs. three-month and 10-year vs. two-month Treasury yield curves have been inverted for more than a year now.  

Already, wrote Rockey, some industries have fallen into “some version of a recession,” including manufacturing, transportation and warehousing, finance and real estate. Within real estate, she added, the slowdown is “across the board,” whether it’s in leasing and investment volume, construction or home sales.  

How do you see 2024 unfolding? We’d like to hear your thoughts. Email me at [email protected]. 


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About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 16-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 7-10 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).