How Bad Will the 2024 Recession Be?

By ITR Economics on February 16, 2023

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ITR Economics is the oldest, privately-held, continuously operating, economic research and consulting firm in the US.

ITR Economics is forecasting that a macroeconomic recession will begin in late 2023 and persist throughout 2024. Business leaders recently had to lead their companies through the recession during the COVID-19 pandemic, and some were even in leadership positions back in 2008, during the Great Recession. It is common and understandable to be wary about next year’s downturn. We know that recessions vary in severity – just how bad will the 2024 recession be?

We expect the 2024 recession will be a relatively mild one for US Industrial Production. However, before breathing a sigh of relief, understand that the recession will not be mild for every industry. In fact, while some will notice hardly any effects of the recession, others will experience steeper decline, as the recession will have a more profound impact on their respective industries.

Causes of the 2024 Recession

ITR Economics had originally forecasted a recession that would span from late 2025 well into 2026. However, the Federal Reserve Board increased the federal funds rate in 2022 as a way to fight high inflation. This aggressive rise in interest rates and the resulting inverted yield curve caused us to pull in that anticipated mid-decade recession to 2024.

If the Federal Reserve Board decides to be even more aggressive, it could make the recession steeper and potentially prolong it into 2025. But while there is that potential, we are not currently forecasting the recession to extend into 2025.

ITR Economics will be following the Fed’s actions throughout the year, so be sure to stay up to date with us for any updates to our recession outlook.

As a reminder, the 2024 recession will not be confined to the US. Other countries, from Canada and Mexico to European nations, will also be feeling the effects of this recession, as the US is such a large part of the global economy.

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The US Economy After the 2024 Recession

Following the 2024 recession, the economy is slated to improve, with rising trends anticipated for US GDP, US Industrial Production, and many individual industries and markets in 2025. This should continue through the rest of the 2020s, with the US economy rising at various rates during that time.

Of course, barring unforeseeable events, this will likely be the last recession before the Great Depression of the 2030s.

As the year progresses, be sure to keep up to date with ITR Economics for the latest information regarding the 2024 recession. For more information regarding our 2024 outlook, watch our recent Executive Series Webinar, Disinflation – Re-inflation – the US Dollar,” featuring ITR Economics CEO Brian Beaulieu and ITR Economics President Alan Beaulieu.

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