A new survey of economists conducted by The Wall Street Journal shows increasing optimism about the U.S. economy, forecasting steady growth and a gradually cooling labor market. Nearly three-quarters of the economists that participated in the survey believe that a Trump win in November will likely lead to higher inflation, up from just over 50% in July.
Why it matters: A stronger economy typically means improved consumer financial health, potentially easing some collection challenges. However, it may also lead to tighter labor markets and wage pressures, affecting businesses’ bottom lines.
By the numbers:
- The unemployment rate is projected to stay near 4.2% by the end of 2024, up slightly from the current 4.1%.
- Economists expect the U.S. to add around 130,400 jobs per month over the next 12 months, nearly unchanged from the 130,900 projected in July.
- Inflation has eased significantly, and the Fed is expected to continue lowering short-term interest rates, now projected to be 4.4% at year-end, down from the 4.75%-5% range set in September.
Zoom out: Despite concerns about inflation and a possible recession, economists are growing more optimistic. GDP growth forecasts have been revised upwards for the rest of 2024. This improving economic outlook could lead to more stability in consumer finances, meaning fewer defaults and stronger payment performance for lenders and collectors.
The big picture: Lower inflation and interest rates are reducing financial pressure on consumers. As the U.S. economy transitions into 2025, expect continued focus on the labor market. The Fed’s policies will be key to shaping consumer spending and debt repayment behaviors, and collection professionals should monitor shifts closely to optimize their collection strategies.
