Economic Forecast for the US Economy

Real GDP is expected to rise by 2.4 percent year-over-year in 2024. Nonetheless, the economy is expected to lose momentum in H2 2024 as high prices and elevated interest rates sap domestic demand. This will provide slower momentum heading into 2025, which may constrain growth in that year to just 1.7 percent year-over-year, despite expectations of stronger quarterly annualized growth as the year progresses.

A more balanced labor market and inflation closing in on the Fed’s 2-percent target point to the start of an interest rate cutting cycle beginning this month. By the end of 2025, the federal funds rate target range may fall to just above 3 percent from 5.25 to 5.50 percent currently.

Second-half 2024 Growth Projected to be Weak

Real GDP growth rose by an upwardly revised 3.0 percent quarterly annualized in Q2 2024 (from 1.4 percent in Q1 2024), led by stronger domestic demand and a surge in inventories. July real personal consumption