Economists describe a Goldilocks economy as one that’s not too hot and not too cold; it’s just right. And 2024 is starting to feel just right. When the Fed started to raise short-term interest rates in early 2022 to rein in inflation, Chairman Powell’s top priority was to manage consumer prices by slowing economic growth without pushing the U.S. into a recession. The goal was to have a soft landing, or what’s called a Goldilocks moment. So far, the 2024 economic scorecard looks like Goldilocks 1, Recession 0. Consumer inflation is slowing, but it’s still above the Fed’s target of 2%. Gross domestic product is solid, with the Atlanta Fed’s GDPNow showing Q1 growth forecast of 2.1%. And payrolls increased by 275,000 jobs in February, which means companies are hiring. Taken together, all three suggest no recession in sight at this point.1,2 |
Meanwhile, the Standard & Poor’s 500 stock index continued to improve in March. Keep in mind the stock market is a discounting mechanism, meaning it’s anticipating what the economy will look like in 6-9 months, which has some wondering if Goldilocks may kick off her shoes and stay a while. Remember that past performance is no guarantee of future results.3 So what’s next? I’m excited about how the economy looks and I’m optimistic about the future. I think back to the August/September 2023 timeframe when nothing seemed to go right for the economy and the financial markets. It’s fair to say that I’m hopeful for the balance of the year. I also hope the three bears take a longer-than-expected walk in 2024! |
1. CNBC.com, March 12, 2024. “Consumer prices rose 0.4% in February, and 3.2% from a year ago.” |
It’s Feeling Like a Goldilocks Moment
