WEST LAFAYETTE, Ind. — Purdue agricultural economists predict an overall positive outlook for 2024 with modest GDP growth, low unemployment, decreasing inflation and a potential lowering of interest rates.
These findings were recently published in the Purdue Agricultural Economics Report’s annual outlook, including potential outcomes of a delayed farm bill. The U.S. economy performed better than predicted in 2023 despite recession warnings and adverse precursors in 2022,. Purdue University Department of Agricultural Economics experts now look to 2024 and provide insights into the national economy, trade, policy and food prices.
“2024 shapes up as a pretty good year. GDP will grow modestly. The unemployment rate will remain low. Inflation should continue to edge downward. Interest rates should edge lower by the end of the year. The leading indicators are still signaling recession. They fooled us last year. So: Fool me twice, shame on me. No recession in 2024,” said Larry DeBoer, professor emeritus of agricultural economics.
“As we enter 2024, the complexities surrounding the farm bill debate persist. With federal spending cuts in focus, the projected cost of the farm bill will likely take center stage in agricultural committee deliberations this year,” said Roman Keeney, associate professor of agricultural economics at Purdue University and co-editor of the report.
Higher interest rates were meant to slow investment borrowing and spending, the newest issue of the report states. Investment spending did fall from the first quarter of 2022 to the first quarter of 2023, but growth has resumed in the past six months. Investment spending is 2.3% higher than is was a year ago, adjusted for inflation.
According to the report, hHigher interest rates do not seem to have had much effect on business structure and equipment investment, which is is up 4% in the past year. But higher mortgage interest rates have reduced residential investment. Housing starts are down 24% since April 2022.
Capital goods orders are a leading indicator of investment in business equipment. Orders are up slightly, by 1.3% over the past year. Building permits are a leading indicator of residential construction, and are down from the previous year by 3.7%. The Federal Reserve likely is finished with interest rate hikes, and may begin reducing rates by the end of 2024. Interest rates won’t cause additional restraint, but probably won’t encourage more spending either. The outlook for investment spending is continued modest growth, the report predicts.
“The Purdue Agricultural Economics Report will closely monitor the evolving farm bill situation through its policy brief series, offering insights into critical legislation impacting farmers nationwide.”
“The Federal Reserve increased their policy rate at the end of 2023 but has kept it stable since August. Recession is a possibility, but it would be sheer stubbornness to continue predicting recession in the face of so much good news,” DeBoer said.
To read the full Purdue Agricultural Economics Report, visit https://purdue.ag/paer. This year’s annual outlook provides insights covering the following topics:
- The U.S. economy
- Trade and trade policy
- Predictions of a new farm bill
- Food prices
- Economic impacts of the Russia-Ukraine war
- Generational gaps in rural communities
- Dairy markets
- Purdue Crop Cost and Return Guide
- Agricultural credit
- Farmland and cash rents
The Purdue Agricultural Economics Report is a quarterly publication from the Department of Agricultural Economics. Articles in the annual outlook issue are intended to provide a road map for understanding challenges facing the agricultural economy.
