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 raising short-term interest rates in early 2022 to rein in inflation,
Chairman Powell’s top priority was managing 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
I’m excited about the economy’s outlook and optimistic about the future. I think back to
August/September 2023, 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!