A softer labor market is forecast, according to the September 2024 NABE Outlook report based on a panel of 32 professional forecasters from the National Association for Business Economics.

“Panelists have revised their economic growth forecasts higher for 2024 and lowered their forecasts for 2025,” NABE President Ellen Zentner said. “Forecasts for the unemployment rate have also been revised upward from the previous survey to 4.1% in 2024 and 4.4% in 2025.”

The median forecast calls for growth in real domestic product of 2.0% this year, up from 1.7% in a similar forecast in May. However, the median forecast for annual real GDP (not inflation adjusted) for 2025 was at 1.8%, which is unchanged from the May forecast.

In addition, panelists’ median forecast for average monthly nonfarm employment growth was downgraded to 166,000 for this year from 183,000 in the May forecast.

Panelists project monthly job gains in 2025 to average 120,000 a month, down from 137,000 in the May forecast.

Panelists also project employee compensation growth to ease this year with projected nonfarm business compensation per hour rising by 3.3%, down from the 3.9% forecast in the May survey. For 2025, nonfarm business compensation per hour is projected to increase 3.2%.

However, their views are split regarding the new normal/neutral rate of monthly nonfarm payroll employment growth for the US:

• 39% estimate it to be between 150,000 and 174,999.
• 29% project it to be between 125,000 and 149,999.
• 23% estimate it to be between 100,000 and 124,999.
• 6% project it to be between 200,000 and 224,999.

The biggest downside risk to the US economy over the next 12 months was a monetary policy mistake, cited by 39%, according to 31 NABE panelists who responded to the question. It was followed by “broadening of conflicts in the Middle East or Ukraine” and the US presidential election at 23% each.

Stronger productivity growth was cited as the greatest upside risk.