Will There Be a Recession in 2024?

Tero Vesalainen / Getty Images/iStockphoto

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

Trusted by
Millions of Readers

With the start of another new year, many economists, businesses, and especially the everyday person like yourself may be wondering, “Will there be a recession in 2024?” While that may be hard to predict, understanding what can cause a recession will help you navigate any coming financial uncertainties.

Keep reading for a look at various economic indicators and predictions that could influence the trajectory of the economy in 2024. Whether you’re an investor, a business owner or just someone planning for the future, you’ll want to be prepared for whatever lies ahead.

Read: 3 Ways To Recession-Proof Your Retirement

What Is a Recession?

A recession refers to a significant, widespread and prolonged downturn in a country’s economy. The most common signs of a recession include two consecutive quarters of negative gross domestic product growth, which measures the total worth of a country’s goods and services, and an increasing unemployment rate due to decreased economic activity.

Reduced consumer spending and business investments are other factors that may result in lower sales and production across many sectors, which has the knock-on effect of lowering stock prices and asset valuations because of reduced economic confidence.

What Will Economic Conditions Be Like in 2024?

Uncertainty may be the watchword for the market this year, and the prospect of a 2024 economic recession remains somewhat vague. Some signs warn of a contracting economy, while others suggest modest ongoing growth.

Signs Pointing to a Stronger Economy

The U.S. job market is strong. Unemployment rates are low, and more jobs are being created, which tends to boost confidence in a stable economy. Although growth might slow down a bit compared to 2023, many analysts still expect the economy to expand in 2024. Inflation, though high, is expected to gradually decrease, making things a bit easier for both consumers and businesses.

Troubling Economic Indicators

However, there are plenty of reasons for caution. Global issues such as the ongoing conflicts in Ukraine and the Middle East could cause significant problems for energy rates and supply chains. Debt is increasing, too, both nationally and for consumers, which could make any economic troubles that much worse. If inflation stays higher than predicted, it would likely hamper consumer spending and business investments, which could contribute to a recession.

While a 2024 recession is possible, it’s far from guaranteed. Many financial experts anticipate a “soft landing,” or a manageable economic slowdown rather than a harsh recession.

Will Inflation Go Down in 2024?

Forecasting what’s likely to happen with inflation is tricky, because it’s a complex issue. It’s impossible to say with certainty whether inflation will decrease in 2024, but several factors indicate it might.

Slowdowns in global shipping and delivery fueled inflation in 2023; if supply chains stabilize in 2024, you might see reduced transportation costs and increased product availability, which could pull inflation down.

The Federal Reserve’s interest rate has been going up in an effort to curb inflation, and if the Fed’s efforts are successful, it could have a moderating effect on economic activity, easing inflation in the process. However, geopolitical conflicts could drive up everything from fuel costs to the price of food.

Then there’s the complicated issue of labor. Though rising wages may seem like good news, businesses tend to pass on increased labor costs directly to consumers, which could also add to inflation by lowering the dollar’s purchasing power.

Whether inflation rises or falls in 2024 hinges on how these and many other factors play out. Although there’s hope for a decline in inflation, economic conditions remain volatile and hard to predict.

How To Prepare for a Possible 2024 Recession

Even though a 2024 recession is still up in the air, you can take steps today to keep your finances stable and weather any potential economic downturn.

Study your income and monitor your spending habits for a month to spot areas where you can save. Focus on essential costs like housing, food and utilities. Some of the best financial advice is to build an emergency fund to cover three to six months of living expenses to shield you from any surprises, like a job loss, during a recession.

Getting ready for a recession doesn’t demand huge changes, but small steps that you take today can yield significant results down the line. By focusing on beefing up your finances, you stand a chance at being resilient against economic hurdles that come your way.

Share This Article: