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| US inflation rate will approach 2% target in 2024. (Source: stock.adobe) |
As of December 5, the CBO forecast the personal consumption expenditures (PCE) index, the Fed's preferred inflation measure, would fall to 2.1% in 2024. Excluding volatile food and energy prices, the core PCE index is forecast to fall to 2.4% in 2024 and reach 2.3% in 2025.
According to the CBO, price pressures are expected to ease in 2024 as consumer spending weakens after a strong 2023, while supply improves and rents decline. The U.S. economy grew more than expected in 2023, but is forecast to slow in 2024 to 1.5% growth, before recovering to 2.2% in 2025.
CBO analysts also forecast that labor market conditions will weaken in 2024 due to slowing demand. The unemployment rate is projected to rise to 4.4% in 2024, from 3.7% in November 2023, according to the latest report. CBO also said the labor force will likely receive a boost from immigration over the next two years.
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