Many people were afraid that 2023 would bring about a recession. It proved to be a very resilient year.

The US economy seems to be benefiting from what many believed to be an almost impossible smooth landing.

(Photo : by Spencer Platt/Getty Image)
Many people were afraid that 2023 would bring about a recession. It proved to be a very resilient year after all.

The unemployment rate is still low, the inflation rate has significantly decreased, and the Federal Reserve may drop interest rates as early as March.

"The triumphant comeback is the noteworthy story of 2023," says University of Michigan professor Justin Wolfers.
Wolfers said that in addition to emerging from the fastest recession in history, the economy also overcame a number of obstacles, including the conflict in Ukraine, fluctuations in oil prices, political unrest, and a host of other problems. 

Calling the economy "the little engine that could," Wolfers was surprised by how resilient it was. He admitted that the situation might have been considerably worse despite experiencing major shocks, demonstrating the economy's remarkable resilience in the face of adversity.

The US economy continues to face many dangers and challenges, from the Israel-Hamas war to the least affordable housing market in a decade. However, there are real reasons for optimism regarding the state of the economy in 2024-forces that are now more apparent than they were a year ago.

Read Also: New York Cheers as Minimum Wage Climbs in 2024

Inflation Cools Down

Following four decades of record high inflation in June 2022, many on Wall Street and in Washington expected inflation to decline.

However, very few had any idea how quickly it would occur. November had a 3.1% year-over-year increase in consumer prices, a significant decrease from June 2022's 9.1% increase.

According to a recent research by economist Ian Shepherdson, the rate at which inflation is cooling down is "remarkable."

By the end of 2024, Mark Zandi, chief economist of Moody's Analytics, said that he anticipates inflation to return to the Federal Reserve's objective of 2%.

Gas prices sharply decreased in 2023 after rising above $5 per gallon in 2022. According to GasBuddy's forecast, US gas prices will average lower in 2024 than they did in 2023, saving customers $32 billion.

The Fed has stopped its massive rate rises, which terrified markets and threatened to crash the economy, since inflation has dropped so significantly.

Even today, rate reductions for 2024 are being planned by Fed officials, which would mean winning the fight against inflation.

Zandi stated that he believes there will be four rate cuts by the Fed in 2024, most likely starting in May. Goldman Sachs is placing a wager that the Fed may begin lowering interest rates in March.

Rate reductions would help Main Street by bringing down the cost of obtaining a mortgage, a car loan, and credit card debt. By the end of the year, mortgage rates will have dropped from about 8% in October to only 6.6%.

Related Article: Wall Street Cheers as Bitcoin Breaks the Chains, Soars Above $45,000 in New Year's Rally