Page 17 - BusinessWest January 8, 2024

ing a race with monetary policy, includ- ing sharp increases or decreases in interest rates.
And he expects that pattern to con- tinue in 2024 while acknowledging that “anything could happen.”
And while that broad sentiment applies to the general economy as well, the prevailing opinion, if there is such a thing, is that the mostly tepid growth in GDP — roughly 2% in quar- ters 1 and 2, but then nearly 6% in Q3 — will continue into 2024, with only a modest chance of the country slipping into a recession, especially if interest rates start coming down, as the Fed has hinted. Sort of.
Overall, 2023 was, in many ways, better than some economists pro- jected, with the country able to skirt
a recession despite aggressive efforts to tame inflation through interest-rate hikes. Nakosteen said the overriding reason for this was that, with the nota- ble exception of housing, consumers were still willing to spend, and with supply chains righting themselves,
“It takes interest rates many, many months, if not years, to work their way through the channels to affect the economy. And some of that is still happening, and that’s causing a slowdown.”
there was plenty for them to spend on. “In effect, supply created demand
and kept things moving,” he said, adding that there are plenty of other positive notes in 2023. Indeed, Wall Street recorded a solid year, with the S&P 500 up a robust 23% over the past year, heading into the final week. Meanwhile, the country continues
to add jobs — roughly 240,000 per month, on average, over the past year — and unemployment remains low at 3.8%.
On the downside, the housing mar- ket cratered, and banks started to suf- fer from a combination of a depressed housing market, a slower commercial- lending environment, and having to pay more than 5% interest on deposits when they had been paying close to zero. However, housing starts surged nearly 15% in November, providing still more evidence that the Fed is engineering a soft landing, with anoth- er 2% growth projected for the fourth quarter.
The $64,000 question, obviously, is whether the momentum seen on these various fronts can continue into 2024.
Nakosteen, as always, said he is not equipped with a crystal ball, and forecasting is difficult given the many unknowns. But he offered this:
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“All indications are that inflation is com- ing under control, which has caused the Federal Reserve to pause on interest-rate increases.”
will tell us if we’re heading into a recession.”
Points of Interest
As he looks ahead to 2024, Tom Senecal, president and CEO of Holyoke-based PeoplesBank, said he believes the momentum generated on inflation and interest rates — meaning the pause orchestrated by the Federal Reserve as inflation started to ease throughout the year — will likely con- tinue into 2024, although there are no certainties.
“All indications are that inflation is coming under control, which has caused the Federal Reserve to pause
TOM SENECAL
“It takes interest rates many, many months, if not years, to work their way through the channels to affect the economy. And some of that is still happening, and that’s causing a slow-
down,” he said, noting the decline from Q3 to what is projected for Q4. “But there is nothing approaching recession; the job market is still very healthy, and that’s the key signal that
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