Page 17 - The SouthChina Business Journal
P. 17
y paid down to keep their
spending levels above inflation.
Pandemic-era savings are largely
gone for those who need them
most, and credit card balances have
risen sharply. Capacity to add more
debt will be limited in 2024.
This will weaken spending and
growth. The economy grew over
5% in the 3rd quarter of 2023 and
is tracking to grow over 1% in the
4th. Growth is projected to slow
even further in 2024. For instance,
the Chamber projects the economy
will grow a scant 0.2% and 0.4%
in the second and third quarters,
respectively. That is a far cry from
growth in the third quarter of 2023.
The worker shortage will put
a floor under how much the
economy slows because job
openings are going to remain far
above the number of unemployed
workers. Plus, wages have been
growing smartly, and they are
likely to continue to do so because
the demand for workers outpaces
their supply.
Economic Whether the consumer slowdown causes a
Headwinds Finally recession remains an open question. It is possible
Take their Toll, the combined force of these headwinds causes a
Perhaps Enough for a recession in 2024. A recession is defined as two
Recession consecutive quarters of negative economic growth.
Even with plentiful jobs and strong wage growth, The last time we had two such quarters was the
the compound effects of savings being spent first and second quarters of 2022. Not many people
down, credit cards spent up, higher interest rates, remember those six months as a recession because
and lingering inflation will weigh heavily on the key economic indicators such as jobs, spending,
economy in 2024. income, and manufacturing output all increased
during that time – the first time they did so during a
The economy has still not fully absorbed the impact recession. The first half of 2022 is largely forgotten
of higher interest rates that were necessary to fight as a recession because on average the American
inflation, and those higher rates will be a continuing people did not feel economic pain then.
drag on the economy.
We could have a similar scenario in 2024. The
While inflation is coming down, it remains above economy could slow, perhaps all the way to the
the Federal Reserve’s (Fed) 2% target. That means point of meeting the technical definition of a
it will remain a hefty burden on consumers’ budgets recession, but because businesses need workers so
and reduce the chances the Fed can lower interest badly, we do not see widespread layoffs. In fact,
rates soon. businesses may keep hiring even as the economy
cools. In that case, we could have another recession
All these factors add up to slowing consumer where there the America people do not experience
spending and a slowing economy in 2024 compared much economic pain.
to a solid economy in 2023.
SOUTH CHINA BUSINESS JOURNAL 14
spending levels above inflation.
Pandemic-era savings are largely
gone for those who need them
most, and credit card balances have
risen sharply. Capacity to add more
debt will be limited in 2024.
This will weaken spending and
growth. The economy grew over
5% in the 3rd quarter of 2023 and
is tracking to grow over 1% in the
4th. Growth is projected to slow
even further in 2024. For instance,
the Chamber projects the economy
will grow a scant 0.2% and 0.4%
in the second and third quarters,
respectively. That is a far cry from
growth in the third quarter of 2023.
The worker shortage will put
a floor under how much the
economy slows because job
openings are going to remain far
above the number of unemployed
workers. Plus, wages have been
growing smartly, and they are
likely to continue to do so because
the demand for workers outpaces
their supply.
Economic Whether the consumer slowdown causes a
Headwinds Finally recession remains an open question. It is possible
Take their Toll, the combined force of these headwinds causes a
Perhaps Enough for a recession in 2024. A recession is defined as two
Recession consecutive quarters of negative economic growth.
Even with plentiful jobs and strong wage growth, The last time we had two such quarters was the
the compound effects of savings being spent first and second quarters of 2022. Not many people
down, credit cards spent up, higher interest rates, remember those six months as a recession because
and lingering inflation will weigh heavily on the key economic indicators such as jobs, spending,
economy in 2024. income, and manufacturing output all increased
during that time – the first time they did so during a
The economy has still not fully absorbed the impact recession. The first half of 2022 is largely forgotten
of higher interest rates that were necessary to fight as a recession because on average the American
inflation, and those higher rates will be a continuing people did not feel economic pain then.
drag on the economy.
We could have a similar scenario in 2024. The
While inflation is coming down, it remains above economy could slow, perhaps all the way to the
the Federal Reserve’s (Fed) 2% target. That means point of meeting the technical definition of a
it will remain a hefty burden on consumers’ budgets recession, but because businesses need workers so
and reduce the chances the Fed can lower interest badly, we do not see widespread layoffs. In fact,
rates soon. businesses may keep hiring even as the economy
cools. In that case, we could have another recession
All these factors add up to slowing consumer where there the America people do not experience
spending and a slowing economy in 2024 compared much economic pain.
to a solid economy in 2023.
SOUTH CHINA BUSINESS JOURNAL 14
