US Economic Growth in 2024: Insights from Generali Asset Management

The US economy is projected to maintain its robust performance in 2024, bolstered primarily by resilient consumption and steadfast capital expenditure despite higher interest rates, according to insights from Paolo Zanghieri, Senior Economist at Generali Asset Management.

Consumption Driving Growth

Zanghieri emphasizes the strength of consumption, stating, 'The US economy enters 2024 on a sound footing as consumption remains very strong.' This strong consumer demand has been a driving force behind the economy's growth trajectory, contributing significantly to GDP expansion. As Zanghieri notes, 'Consumption accounted for 2/3 of growth' in the latest quarter.

Moderating Inflation

Moreover, despite concerns about inflation, Zanghieri highlights a cooling trend, stating, 'Despite strong demand, inflation continues to cool down.' This moderation in inflation, particularly core PCE inflation, is crucial for the Federal Reserve's monetary policy decisions.

Cautious Approach from the Fed

Zanghieri anticipates a measured approach from the Fed, explaining, 'The Fed can assess patiently the evolution of inflation.' This cautious stance suggests that while rate cuts are expected, they will likely be gradual and contingent upon data on inflation and economic growth.

Regarding the labor market, Zanghieri observes, 'The labor market continues to rebalance in a gradual way.' This indicates a healthy adjustment process, characterized by minimal job destruction and a decreasing quit rate, which in turn helps moderate wage growth.

Economic Outlook

Looking ahead, Zanghieri predicts a 'relatively soft landing of the economy,' which aligns with the Fed's outlook. This forecast implies that while the economy may experience some deceleration, the risk of a significant recession remains low.

In summary, Zanghieri's analysis underscores the resilience of US consumption and the cautious optimism surrounding the economic outlook. With consumption driving growth and inflation moderating, the US economy appears poised for continued expansion in 2024