Economy will slow but avoid recession in 2024, contends Congressional Budget Office

The U.S. managed to avoid a recession in 2023 and will continue to grow next year, albeit slowly, the Congressional Budget Office said Friday in new economic projections that painted a mixed picture for President Biden.

Real gross domestic product will expand by 1.5% in 2024, down from 2.5% this year, the CBO said, blaming weaker consumer spending and commercial construction.

Meanwhile, unemployment will tick up, though still remain at healthy levels, going from 3.9% now to 4.4% at the end of 2024 and remaining at about that level in 2025. The workforce will grow moderately, powered chiefly by new immigrants, the CBO said.

Most worrying for Mr. Biden is that just as voters cast ballots near the end of next year, the economy will be adding only 45,000 new jobs a month.

The softer labor market will slow inflation, putting it at 2.1% next year. That’s near the 2% target the Federal Reserve shoots for and it’s good news for Mr. Biden, who has been pummeled by accusations that Bidenomics caused the 40-year high inflation period the country just went through.

Inflation will then rise a bit in 2025 as the economy picks back up, the CBO said.

That the U.S. managed to avoid a recession this year is remarkable. Bloomberg’s economists in 2022 put a 100% probability to one happening in 2023.

Instead, real GDP is growing by 2.5% this year, up from 0.7% in 2022.

The CBO still detects some slowing. Real GDP growth is at 0.8% this quarter and will be at 1.3% in the first quarter of next year before rising to 1.7% on an annualized quarterly basis by the end of 2024.