As we barrel closer to 2024, the economic outlook is nothing if not dynamic. While the banking sector grapples with persistent challenges, whispers of an impending recession gain weight. Yet, the US economy continues to defy expectations.

Resiliency factors, most notably consumer spending and labor market strength, have largely refused to yield despite mounting recessionary pressures.

But can it last? As we peer into the horizon of the next 12 to 18 months, it’s evident that inflation is central to the forecast. The puzzle lies in determining the extent of its impact.


Once again, the US consumer plays a vital role in driving growth, with inflation-adjusted spending growing at an annualized rate of 3.8% in the first quarter of 2023. Although data from high-frequency credit card transactions through May hints at a potential 1-2% cooling towards the year’s end, this is still a positive outcome considering the substantial growth earlier in the year.1

Experts suggest that strong starting points in income, savings, and job demand have muted the impact of household spending. And while many of these positive factors remain, they are gradually returning to pre-pandemic levels. In the face of increasing headwinds from higher interest rates and the challenges some households face due to the expiration of a three-year student debt payment moratorium, a slowdown in spending momentum is expected as the year progresses.2


The pandemic accelerated changes in labor markets driven by demographics. The demand for workers who can command higher wages than historical standards persists even as the Federal Reserve adopts a more restrictive monetary policy.

This robust labor market is yielding slower-than-anticipated disinflation. Wage pressures have eased but are still persistent, especially in service industries. As of May, job growth data shows a three-month moving average well above the requirement for trend growth in the labor force. While the breadth of hiring has narrowed compared to the previous year, it has yet to fall to pre-pandemic levels. Additionally, data from Indeed shows job openings increased in April, and trends suggest they have maintained stability rather than declining throughout early summer.4 Considered in relation to the low level of jobless claims, it becomes clear that the labor market may still have room to run.


As expected, the resilience of consumers and labor markets contributes to enduring inflation. The personal consumption expenditures price index,  an approximation closely monitored by the FED, has showed some progress but isn’t projected to meet the Federal Reserve’s 2% target until the first half of 2025. If both inflation and the job market continue to surpass expectations, the Federal Reserve might need to make further adjustments.5

While the US economy has so far averted a recession, challenges persist. Experts anticipate some degree of market softening, although the extent remains uncertain. As sticky inflation proves hard to tame, the conundrum becomes one of choosing lesser evils. The Fed continues grappling between raising rates too aggressively, pushing the economy into recession, or being too cautious and risking stagflation. While a definitive conclusion might be premature, the risk remains elevated as central banks seek the optimal policy rate to break the inflation chokehold.6


While it’s evident that inflation plays a crucial role in the 2024 economic outlook, it’s critical to remember it’s just one facet of the complex picture. Geopolitical factors, commodities, regional influences, and local dynamics all interplay to form a comprehensive perspective.

Regardless of the outcomes, MJ is prepared to navigate changing the landscape alongside you. Grounded by data, we synthesize vital insights to help you steer through uncertainties, achieve your business objectives, and thrive. We’re about more than just today’s solutions; we put processes in place to continuously identify new solutions that align with your unique organizational goals.

Contact us today and discover how MJ can help put your future in focus.


  1. “U.S. Quarterly Economic Forecast.” Accessed August 1, 2023.
  2. Global economic outlook improving, albeit to a low growth recovery
  3. “The Prime-Age Labor Force Participation Rate.” Indeed. Accessed Aug 2, 2023.
  4. Nick, Bunker. “May 2023 Jobs Report: Blockbuster Gains with Some Red Flags” org.
  5. ‌“Global economic outlook improving, albeit to a low growth recovery.” org. Accessed Aug. 1, 2023.
  6. “Economic Recovery in 2025: Trust and Also Verify.” com. Accessed Aug. 1, 2023.