This year looks to be a much better one for the U.S. economy than business economists were forecasting just a few months ago, according to a survey released Monday.
The economy looks set to grow 2.2% this year after adjusting for inflation, according to the National Association for Business Economics. That’s up from the 1.3% that economists from universities, businesses and investment firms predicted in the association’s prior survey, which was conducted in November.
It’s the latest signal of strength for an economy that’s blasted through predictions of a recession. High interest rates meant to get inflation under control were supposed to drag down the economy, the thinking went. High rates put the brakes on the economy, such as by making mortgages and credit card bills more expensive, in hopes of starving inflation of its fuel.
But even with rates very high, the job market and U.S. household spending have remained remarkably resilient. That in turn has raised expectations going forward. Ellen Zentner, chief U.S. economist at Morgan Stanley and president of the NABE, said a wide range of factors are behind the 2024 upgrade, including spending by both the government and households.
Oh so there won’t be a recession? Why were there so many layoffs then?
Layoffs are mostly happening in the tech, finance, and media sectors, while other industries are actively hiring:
Blockbuster job growth in the past several months has coincided with high-profile layoff announcements by a number of large companies.
So, how are both occurring at the same time? It’s not as contradictory as it might seem. Recent job cuts have been concentrated mainly in just a few sectors: technology, finance and media.
Relative to the U.S. labor force of 160 million people, layoffs so far have been dwarfed by consistently vigorous hiring — a monthly average of 248,000 jobs added over the past six months. The unemployment rate is still just 3.7%, barely above a 50-year low.
It turns out that many of the companies that are now shedding jobs had over-hired during the pandemic, when they thought the trends that emerged then — especially a surge in online shopping — would continue apace. As the economy has normalized, many of these companies have discovered that they no longer need so many employees and have responded with layoffs.
https://fortune.com/2024/02/03/why-tech-media-layoffs-growing-economy-jobs-report-boom/
Because intest rates are above %0 and investors demand line go up. if you make a million dollars, next year you have to make 1.3 million or your company is a “failure”.
