9 Predictions on the Economy & Site Selection in 2024
by King White, on Jan 19, 2024 8:30:00 AM
Looking ahead to 2024, several key predictions and expected trends could shape the U.S. economy and corporate site selection decisions. Making predictions can be challenging and should always be considered an opinion of the possibilities. It’s important to note that economic forecasting is complex and subject to change due to unforeseen circumstances such as black swan events. Here are nine predictions to consider going into 2024:
1. Soft Landing Recession
It is predicted by many that the U.S. economy is expected to have a soft landing, just missing heading into a deep recession. Growth rates will stabilize to an estimated 0.9% in 2024 as the economy returns to more normal operations, moving past the initial rapid recovery phase that can result in high inflation.
2. Inflation and Interest Rates
Inflation is still a significant concern despite recent drops. The Federal Reserve has indicated it will reduce interest rates in 2024 as inflation gets under control. The Fed’s projections show a decrease in the expected end-of-2024 interest rates to 4.6%, hinting at multiple rate cuts next year. Rate reductions could spur corporate capital investment, help the struggling commercial real estate capital markets, and improve residential sales volume.
3. Low Employment Rates
Unemployment remains low, which challenges most employers despite recently announced layoffs. The Congressional Budget Office projects that unemployment will increase to 4.4% in the fourth quarter. The trend toward remote work and the gig economy will likely persist, potentially reshaping the labor market and influencing where and how people work. Companies looking to relocate and expand continue to favor larger metro areas over smaller rural areas due to the access to a much larger employment pool.
4. Supply Chain Realignment
Efforts to realign supply chains will be a priority, potentially reshaping global trade patterns. This includes diversifying supply sources and reshoring manufacturing to the U.S. In addition, the IRA and CHIPS Acts will continue to help drive more industrial growth in the U.S.
5. Technological Advancements and Automation
Continued advancements in technology and automation are expected to drive productivity as companies grapple with labor shortages. This could lead to job displacement in some sectors, yet could create new opportunities in tech-driven industries. It could also help reduce the value proposition from labor arbitrage of offshore geographies and help drive more reshoring to the U.S. Also, don’t forget about the unknown impact of artificial intelligence advancements.
6. Real Estate Market Adjustments
The real estate market may undergo further adjustments, with potential shifts in the office real estate sector due to changing work patterns and continued strength in residential markets, albeit potentially at a slower pace than the immediate post-pandemic period. Return-to-work mandates could help the office real estate market recover. On the industrial side, the demand for bulk distribution and warehouse space will continue to slow due to overbuilding during the pandemic. In contrast, the demand for quality greenfield industrial manufacturing sites will remain high, especially in the Southeast U.S.
7. Elections and Government Fiscal Policy
The upcoming 2024 presidential election will provide a glimpse of what the next four years might look like. Government fiscal policy, including potential new spending initiatives and tax reforms, will be key factors influencing economic growth and distribution of resources for the next few years.
8. Geopolitical Conflicts
Geopolitics will continue to be a significant influence on global markets. International trade policies, geopolitical tensions, and global market dynamics will continue to impact the U.S. economy, underscoring the interconnectedness of global economies. The conflicts and tension in China, Russia, and Israel will need to be closely watched.
9. Healthcare Sector Resilience
The healthcare sector will see continued growth and resilience, driven by an aging population, technological advancements, and ongoing public health challenges. It has proven itself as one of the most impactful economic development forces and employment drivers in the U.S.
These predictions provide a broad overview of the potential economic landscape for the U.S. in 2024 and may influence site selection trends in the future in many ways. If you need help evaluating the impact of these trends on your business and location decisions, contact Site Selection Group’s team of site selection, economic incentive, and real estate experts to assist you.