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CBO report flags millions of Americans will lose their job in 2024

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A report released by the Congressional Budget Office (CBO) on Friday painted a bleak picture of the U.S. economy in 2024, projecting a rise in the unemployment rate from 3.9 percent to 4.4 percent by the end of the year, which would mean millions of Americans losing their jobs.

A hiring sign is displayed at a retail store. (AP Photo/Nam Y. Huh)(AP)
A hiring sign is displayed at a retail store. (AP Photo/Nam Y. Huh)(AP)

The report, titled ‘Current View of the Economy From 2023 to 2025’, also forecasted a slowdown in the real gross domestic product (GDP) growth from 2.5 percent in 2023 to 1.5 percent in 2024, as a result of economic adjustments and policy changes.

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The CBO, a nonpartisan office that provides economic analysis for Congress, attributed the expected deterioration in the economic conditions to several factors, including weaker consumer spending, lower nonresidential investment, and reduced exports. The report said that these factors would outweigh the positive effects of higher government spending and lower taxes.

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What is the Economy report project?

The report’s projections were consistent with the current trends in the labor market, which showed signs of tightening in December. According to the report, about 202,000 new claims for unemployment benefits were filed in the first week of the month, and about 1.87 million workers were still receiving unemployment benefits, indicating a scarcity of job opportunities.

The Federal Reserve, the central bank of the U.S., had a similar outlook for the economy in 2024, although slightly more optimistic than the CBO. The Fed predicted that the real GDP growth would slow down to 1.4 percent in 2024, before rebounding in the following years. The Fed also expected the unemployment rate to increase to 4.1 percent by the end of 2024, which was lower than the CBO’s estimate.

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The report also said that the Fed would respond to the weakening economy and the falling inflation by cutting interest rates sometime after March of 2024. It estimated that the inflation rate, as measured by the personal consumption expenditures (PCE) price index, would decline to 2.1 percent in 2024, closer to the Fed’s target of 2 percent.

The report also noted that the CBO had revised its economic outlook downward since its previous report in February, mainly due to the slower-than-expected growth in consumption, investment, and exports.

The question is whether the U.S. economy was heading toward a recession

Jeffrey Buchbinder, the chief equity strategist at LPL Financial, quoted to Newsweek last week that the Fed’s decision to cut rates would be a sign that the recession was either imminent or already underway.

“The Fed will cut rates because it worries monetary policy is too restrictive for a weakening economy,” Buchbinder said before the Fed announced that it would keep the rates unchanged at 5.25 percent to 5.5 percent.

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“The central bank’s goal remains a soft landing, and their spotty track record in achieving that goal does not mean a hard landing is necessarily in the cards.”

Buchbinder added that if a recession did occur in 2024, it would likely be mild, as the U.S. economy had strong fundamentals and was not facing any major shocks or imbalances.

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