This is old news to Trends Journal subscribers, but it’s making headline news now! After exceeding expectations this year, thanks to tight job markets and consumers’ continued shopping, growth among the worlds’ leading economies will slow next year, many economists now expect.

The average forecast for next year’s expansion among major economies has fallen from 2.4 percent to 2.1, due largely to persistently higher interest rates imposed by central banks, the Financial Times said.

The average prediction for U.S. growth in 2024 has slipped to 0.6 percent. 

This year’s stronger-than-expected gains are drawing some growth away from next year, Simon MacAdam, Capital Economics’ senior global analyst, told the FT.

However, economists generally have “genuinely become more downbeat about prospects in 2024,” he added.

Their pessimism grows out of the belief that relentless consumer spending will prod central banks to leave higher interest rates in place longer, hobbling growth.

“Services demand has continued largely unabated, the labor market has stayed strong, and wages have continued to rise,” Citi chief economist Nathan Sheets said to the FT. 

“There will be a recession” in many countries, including the U.S., he added. “It’s just going to come later.”

Earlier this year, many analysts were expecting the U.S. Federal Reserve to begin cutting rates by now, in part because economists were expecting a recession.

However, the economy’s continued strength now has persuaded many analysts that the Fed could raise its key rate again before this year ends.

The Fed is likely to make its first rate cut next spring, according to a growing consensus among economists.

Europe’s economy also has performed “somewhat better than feared” this year, Mark Zandi, chief economist at Moody’s Analytics, said in comments quoted by the FT. That means the European Central Bank (ECB) and Bank of England (BoE) also are likely to keep rates higher for longer, he noted.

The ECB is expected to leave rates high until late next year. The BoE is thought to begin paring back its rate in the second half of 2024.

China’s structural economic weakness also will continue to drag down the world’s GDP next year, economists said.

TRENDPOST: Europe is poised on the brink of a recession. Even if China’s export trade returns, the country is still facing structural issues—an aging workforce, a persistently weak consumer economy, and poorly managed business regulation, among others—that will continue to ail its economy.

The overwhelming debt carried by governments, businesses, and households is subtracting money from the economy that could be invested for growth but will not be.

All of these headwinds increase the likelihood of a global recession, particularly among developing nations.

In that event, expect more street protests, social unrest, and the emergence of new political parties, as we have predicted in our Top Trend 2023, “Anti-Establishment – New Political Parties.”