The U.S. economy is running much hotter than many Wall Street economists expected this year, according to the latest survey of chief economists by the U.S. Securities Industry and Financial Markets Association (SIFMA).
On Thursday, the industry trade group published the results of its biennial survey, detailing the surprising resilience of the economy this year, with the median real GDP growth forecast for 2024 coming in at 2.4% in November, up from the previous June forecast for just 1.6% growth.
The median forecast for 2025 is little changed, with growth ultimately expected to slow next year to 1.9%.
“The top factors impacting U.S. economic growth are the U.S. labour market, U.S. trade policy, and U.S. monetary policy. U.S. trade policy also shows up near the top in both upside and downside risks to the economy,” SIFMA noted.
The median forecast for core inflation came in at 2.8% for 2024 (on a year-over-year basis), which is unchanged from the June survey. The rate was forecast to ease to 2.4% next year.
The top factors influencing forecasts for core inflation estimates, SIFMA noted, are wage growth, growth in domestic demand and monetary policy.
“As we approach the end of 2024, our survey reveals the U.S. economy’s extraordinary growth and projects continued strength into 2025,” said Jay Bryson, chair of the SIFMA Economist Roundtable and managing director and chief economist with Wells Fargo Securities, in a release.
“Nearly half of the panelists place the odds of recession in 2025 at less than 15%, while one-third predict a likelihood between 15% and 30%.”
Bryson noted that the dispersion of forecasts for 2025 “indicates some difference of views that may reflect policy uncertainty with the incoming administration.”
“Overall, real GDP growth should remain solid, inflation should continue to recede, and the Federal Reserve will cut rates lower, signalling continued economic stability,” Bryson added.
All of the economists surveyed said they expect the Fed to cut rates this month, with 90% anticipating a 25 basis point cut. The median forecast is for rates to be down by 100 bps from current levels in 2025, and to finish 125 bps lower than current levels at the done of 2026.
The survey was conducted between Nov. 8 and Nov. 22. It involved participants from the SIFMA Economist Roundtable, which is comprised of chief U.S. economists from around 20 global and regional financial institutions.