If there is a positive aspect to the interminable period between the election and the inauguration of a new president, it is that it affords one the opportunity to reflect on the previous year. So rather than distract myself with either online shopping or ruminations of what the New Year will bring, I am instead trying to sharpen my hindsight on what has happened during the past twelve months.
Here are my major economic takeaways from 2024, or at least, here are the trends I think I can see with sufficient clarity at this time.
Barring an unforeseen catastrophe, the U.S. economy will enter 2025 with solid momentum. One of the major themes with regard to the prevailing trends in the macroeconomic indicators in 2024 is that they have consistently overperformed expectations, and it looks like they will continue to do so through the fourth quarter.
The two most publicized vital signs pertaining to the health of the economy—the stock market and the labor market—have never looked better. The stock market is trading at or near all-time highs. Of the major stock indices, the Dow Jones Industrial Index is the laggard with a gain of only 16 percent so far this year. The Russell 2000 Index is up a tidy 21 percent while the S&P 500 Index and the Nasdaq 100 Index are both up a sparkling 25 percent for the year.
It is clear the stock market approves of the election outcome. And while there is still time for a crash in 2024, it would take something disastrous to wipe out gains of this magnitude. I cannot remember anybody forecasting gains this large at the beginning of 2024, but I can clearly remember forecasts calling for the market to be flat or even down for the year.
The number of people employed is also at an all-time high, and the unemployment rate is holding steady at just above 4 percent. The pressure in the labor market is gradually dissipating as 2024 comes to an end. However, there are still sectors of the economy dealing with acute labor shortages. Here again, I cannot remember anybody forecasting a labor market this robust for 2024.