After a better-than-expected performance in 2023, what happens with the economy in 2024 could depend largely on the labor market and what the Federal Reserve does with interest rates, National Retail Federation Chief Economist Jack Kleinhenz said today.
“Federal Reserve officials have tough policy choices ahead as they decide on what to do and when,” Kleinhenz said. “There is still a risk that keeping rates too high could curb the economy’s momentum more than necessary. Yet if they lower rates too soon, it could allow the economy to re-inflate and make it harder to contain inflation pressures.”
“I remain of the view that consumer spending will continue to grow, but at a rate slightly below overall GDP growth,” Kleinhenz said. “Consumers were in decent shape heading into the holiday season, but the labor markets, while unlikely to unravel, do look likely to cool, which would impact consumer expectations and, in turn, affect spending decisions.”
Kleinhenz’s comments came in the February issue of NRF’s Monthly Economic Review, which said the economy “has been more resilient than expected” and shows “no sign of a recession,” citing the 3.3% annual growth in gross domestic product for the fourth quarter and 2.5% for the year. Disposable personal income was up 6.9% year over year in December and retail sales as defined by NRF – excluding automobiles, gasoline stations and restaurants to focus on core retail – were up 3.3%. November-December holiday sales were up 3.8% over 2022, easily meeting NRF’s forecast for 3-4% growth.
Read the rest of the NRF article
