Just before the start of the new year, I made a series of economic and business predictions for 2024. In that column, I indicated that my predictions were based on a “mix of data and pragmatic optimism.” As noted in my most recent column, I consume a significant amount of business information through various forms of media such as print, television, radio, and podcasts, and my predictions were an attempt to integrate and synthesize that information into a forecast of the future. As we approach the midpoint of 2024, I thought it would be a good time to evaluate those predictions and discuss any potential changes I might have based on what has happened so far.
My predictions were in four broad categories: National Economy; Managing Your Business/Trends in the Workplace; Local Economy; and Business of Sports. In each of these categories, I will provide you with my original predictions, an evaluation of how each prediction is holding up so far, and any changes I might expect to my original prediction for the second half of the year. In this week’s column, I will review the “economy” (national and local) categories. Next week, I will review the other two categories.
National Economy:
Prediction #1: “While the annual inflation rate has dropped to 3.2% from its high of 9.1% in mid-2022, inflation will remain sticky and likely not reach the Federal Reserve’s target rate of 2% until 2025.”
- Evaluation: Nailed it so far. From January to May, the annual inflation rate has remained between 3.1% and 3.5%.
- Looking Forward: While the rate of inflation can potentially drop in the second half of 2024, even the most optimistic do not expect it to reach 2% by the end of the year, so I will stick with my original prediction.
Prediction #2: “The Federal Reserve will not lower interest rates prior to the fourth quarter (post-election) of 2024. While financial markets have already priced in rate reductions by Summer 2024, the Fed will err on the side of caution and not lower rates until the annual inflation rate is under 2.5%.”
- Evaluation: So far, so good. While many expected interest rate decreases by now, even the most optimistic do not expect a rate decrease when the Fed next meets in July.
- Looking Forward: Many are predicting the first rate cut to come in September, but I still hold to my original prediction. The combination of sticky inflation and the coming election will cause the Fed to hold off on any rate cuts until their November or December meeting at the earliest.
Prediction #3: “Despite these higher rates, the Fed will get its desired “soft landing.” While the growth of the economy will slow in 2024, it will not turn negative, thus, avoiding a recession.”
- Evaluation: Right on track. The economy has been slowing, but still growing with a 1.6% GDP growth in the first quarter of 2024.
- Looking Forward: Most are looking for a continual slowing of the economy for the remainder of the year, but I believe we will continue to avoid a recession and stick by my original prediction.
Local Economy:
Prediction #1: “The CSRA will continue to successfully recruit new business to the area. Investment in workforce development will attract not only manufacturers, but technology and service companies as well.”
- Evaluation: In the first half of the year, we can probably already consider this one correct, particularly in manufacturing and services. Three major investments have been made in the area this Spring, including Syensqo’s new Augusta manufacturing facility, StandardAero’s expansion of aircraft services by the Augusta Airport, and GF Castings’ new manufacturing facility being built in Augusta Corporate Park.
- Looking Forward: The only question left is whether lack of capacity will slow economic expansion in the CSRA. The GF Castings investment brings Augusta Corporate Park very close to full capacity. Future expansion may have to come from technology and services.
Prediction #2: “We will still be waiting for the “cyber tsunami” in 2024. The CSRA continues to build the foundational pieces in education, training, and entrepreneurship to become a cybersecurity power, but it does not happen overnight. However, when the tsunami finally hits, it will be an “overnight success story that was years in the making.”
- Evaluation: Jury is still out, but growth in this area is still somewhat limited.
- Looking Forward: As noted in my original prediction, the CSRA continues to be building foundational pieces for the inevitable tsunami. This is a long-term economic development effort with a payoff that is still years off.
Prediction #3: Federal government investment will be the big story of the economy in the CSRA in 2024. Between the revitalization of the Savannah River Site (SRS) and the White House’s “Investing in America,” selection of Augusta as a “workforce hub” will have a major impact on our local economy.
- Evaluation: Not much new news on these efforts since the start of 2024.
- Looking Forward: I will stick with this prediction. There is a large budget item in the current FY 2025 Federal Budget for the ongoing development of the Plutonium Process Facility at SRS. While “Investing in America” is a program of the current Presidential administration, some aspects of it may remain even if there is a change of administration.
Through the halfway point in the year, my economic (particularly national) predictions are doing very well and there is not much on the horizon to cause me to change them. In next week’s column, we will see if I am doing just as well on my “Managing Your Business/Trends in the Workplace” and “Business of Sports” predictions as we pass the halfway point of the year.
