In the first estimate for next year, CEOs forecast that the economy will expand by 1.9 percent, averting a recession and potentially realizing the soft-landing prognostication. Plans for capital investment tumbled by seven points. Despite a slowing economic landscape, more chief executives plan to add workers in the coming months, although not at the pace witnessed during the jobs boom of the past few years.
“The results of this quarter’s survey are consistent with an economy that is cooling and the Federal Reserve’s strategy to bring inflation back to target,” Business Roundtable CEO Joshua Bolten said.
At the final monetary policy meeting of 2023, the Federal Reserve left interest rates unchanged. The primary development from the December Federal Open Market Committee (FOMC) meeting was the indication that the central bank intends to cut interest rates three times in 2024, loosening monetary conditions and diminishing the blows of a tighter economic climate.
Aside from lowering interest rates, the Business Roundtable survey suggested that lawmakers could restore provisions to bolster capital investment and support growth, from immediate expensing for research and development to eliminating burdensome regulations.
“We urge Congress to restore these policies as soon as possible to increase domestic investment, create American jobs, and strengthen U.S. competitiveness,” Mr. Bolten said.
A Peek at the Labor Market
With labor conditions coming into balance, many private-sector employers are laying off workers.In recent weeks, many major companies have trimmed their headcounts, including Ernst & Young, Hasbro, Spotify, Citi, Amazon, and Chewy.
“The job market is loosening, and employers are not as quick to hire. The labor market appears to be stabilizing with a more normal churn, though we expect to continue to see layoffs going into the New Year,” Andrew Challenger, a labor expert and senior vice president of Challenger, Gray & Christmas, Inc., said in the report.
In the small-business community, the Fed’s inflation-fighting rate-hike campaign has affected many entrepreneurs, according to Andrew Crapuchettes, CEO of RedBalloon.
“The Fed’s Christmas gift to small business owners is more pain and discomfort. If inflation was the right hook that put small business owners on the ropes, the Fed’s decision today is the lights-out punch,” Mr. Crapuchettes said in a statement. “What’s happening inside the Beltway doesn’t reflect the state of the rest of the country. They are suffocating these employers with high interest rates that probably won’t come down for at least another quarter.”
Mixed Expectations Heading Into 2024
After the gangbusters third-quarter GDP report that saw the U.S. economy expand by 5.2 percent, solid November jobs data, and the slowing rate of inflation, recession talk has diminished.“The probability of recession continues to recede in the United States as the banking turmoil subsides and strong labor market resilience and rising real incomes support consumer demand,” BMO economists Doug Porter and Scott Anderson said in the survey.
Speaking to reporters following the December FOMC meeting, Fed Chair Jerome Powell noted that elevated price pressures continue to weigh on the public’s finances.
“The price level is not coming down. Prices of some goods and services are coming down, but overall, the aggregate price level is not good. So, people are still living with high prices,” he said.
The good news is that the latest surveys suggest that people are expecting lower inflation rates next year, supporting higher consumer confidence.
Mr. Powell said the economy isn’t in a recession now but that it’s possible in 2024. The public appears to think the nation is already in a downturn. The financial markets are rocking, while executives think everything is holding steady. The landscape of economic opinions is truly mixed.