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February 2024 #16295 Page #64
A Mixed Start to 2024 By The Lesko Financial Services Team
eginnings always feed the temptation to look ahead and make predictions, and recent economic news, podcasts, and websites have featured their fill.
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2024 went out on a fairly positive note and it was tempting to try to extend that optimism beyond the first few weeks of January. But despite encouraging signals, December’s inflation number, released mid-month, showed that there are still challenges to tackle. The year-over-year number came in at 3.4%—an unexpected jump from November.
Slow progress Since reaching a high of 9.1% in June of 2022, the annualized inflation rate has been on a downward trend. It declined to a low of 3% this past June, but it’s been a few steps forward and a few steps back since then. The Federal Reserve, trying to slow the economy down and reach its desired target of 2% inflation, raised interest rates 11 times in 15 months. The Fed paused rate hikes last September and tentatively penciled in three interest rate cuts for 2024. Exhilaration on Wall Street over that possibility fueled record highs in all major indices. December’s inflation number, however, caused the market to give up some of those gains, although we remain close to the high-water mark. It appears we have returned to market volatility and an air of uncertainty lingers. Whether the Fed will make good on its hoped-for interest rate cuts early in the year or take a wait-and-see approach is the current question on Wall Street and Main Street. “Fed-guessing” has become the pastime of pundits and analysts, some of whom still foresee interest-rate relief in 2024, but perhaps more slowly or later than anticipated.
Forecasts mixed With the economy looking stronger throughout last year and the U.S. labor market adding jobs at higher rates than expected, recession predictions have begun to mostly—although not completely—fade.
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