National Economic Outlook
By Ingo WInzer
Growth in the US economy, as reflected in the rate at which new jobs are being created, keeps slowing, producing a situation where any new shock, like the wars in Ukraine and Israel, the price of oil, or political instability can cause consumers to shut their wallets and create a new recession.
The number of jobs in December was 1.9 percent higher than a year ago, which would normally indicate a very healthy economy. But a good deal of that growth is due to extraordinary re-hiring levels in the healthcare, restaurant and government sectors, which won’t continue through 2024. The current fundamental rate of job growth is probably 1 percent.
The best marker of actual business activity is the rate of job growth in the very large business services sector, which provides services that other businesses need, like lawyers, accountants, computer services, office cleaning, temporary workers, waste management, and many others. Job growth in this sector fell to just a half percent in December.
A big unknown for 2024 is what will happen with home prices. Economic studies show that consumer spending – 70 percent of the economy – goes up and down with home prices. Home prices soared during the last couple of years, boosting spending; but that surge has ended, leaving home prices far too high. The most likely outcome in 2024 – and it’s already happening in big markets like Phoenix and Austin – is that home prices will fall, and consumer spending as well.
In December, jobs were up 3 percent in construction, 0.2 percent in manufacturing, 0.7 percent in retail, 0.4 percent in finance, 0.5 percent in business services, 4 percent in healthcare, 2.6 percent at restaurants, and 3 percent in government.
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