The economy will do well this year, said Belinda Román, the economist dubbed as 2023’s top forecaster by the Wall Street Journal.
Román, a St. Mary’s University associate professor, who the WSJ said is “the college professor who got a weird year for the economy right,” said in a CNBC interview that although the labor markets are still very robust, they are slowing down.
She forecasts the unemployment rate to be at 3.6% in 2024. The Congressional Budget Office projects 4.4%.
“Certain parts of the economy are going to maybe feel it a little bit more than others,” she said. “But the aggregate is going to be positive.”
Depending on the political situation, things may change for the better or for the worst, she added, but said she is “relatively optimistic.”
In forecasting the economy last year, Román said she paid attention to the volatility in the labor market and what it had to say.
This year, she said, international crises such as China’s property crises, are transferring into the U.S. and should be of concern.
“We’re increasingly globalized,” she said. “So, there are some markets in the U.S. that have very intimate ties with the foreign sector. As those start shifting, ours also start shifting.”
The stagnation of the Fed in cutting rates is affecting several sectors, such as housing, automobiles “and anything that requires a big chunk of money or is dependent on interest rates.”
“I think the Fed is looking at some of these things and thinking, ‘Okay, how can we moderate the impact of higher interest rates, as well as bringing them down,” she said. “But the timing is going to be difficult because there are other things going on: China, the ECB. So, how does that filter over to us? And how do we incorporate it into our models?”