The 2024 presidential campaign will take place under a troubled economy, the Congressional Budget Office projected Wednesday, foreseeing slowing growth and rising unemployment.
Growth will dip to less than half a percent in the final quarter of this year, delivering an annual rate of growth in Gross Domestic Product of less than 1%, CBO said.
Things will pick up next year but growth will still come in at just 1.5%, before topping 2% in 2025.
On the jobs front the news is also grim.
“Labor market conditions are expected to slacken in the second half of 2023,” CBO said.
The jobless rate, which has been enjoying record lows as the pandemic eased, will rise from 3.6% now to 4.1% by the end of this year and 4.7% at the end of 2024.
By the middle of next year the economy will be losing 18,000 jobs a month.
Things will improve in 2025, as growth returns.
But in the meantime, the slipping economy will help to tame inflation. The price index for personal consumption expenditures will be 3.3% this year, falling to 2.6% next year.
CBO’s projections suggest the country will avoid a recession, which had seemed a near-certainty to prognosticators late last year, but will still see a significant slowing as real GDP growth goes from 1.4% in the just-completed second quarter to 0.6% this quarter and 0.3% in the final quarter this year.
The growth is powered by a slowdown in consumer spending, as high interest rates and rising unemployment “cause consumers to pull back” this year.
“Consumers have drawn from their stockpiles of savings in 2022 and 2023 to support their spending. But rising delinquency rates on credit cards and consumer loans suggest that some earners have exhausted their savings and will have less wherewithal to maintain spending in the face of elevated interest rates and unemployment,” the CBO said.