Economic Forecast 2024:
Reasons for Concern and Cause for Optimism
D
r. Stanley Longhofer is the Director of the Center for Real Estate at Wichita State University. Dr. Rob Dietz serves as NAHB Chief Economist. Almost 300 KCHBA members gathered to hear their thoughts and analysis at the 2024 KCHBA Economic Forecast Breakfast held on Jan. 18.
Job Growth and Participation
According to Dietz, 12 states and Washington D.C. have not reached pre-Covid job numbers, with Hawaii being the most impacted at a current 5 percent loss. Missouri sits right above Kansas in growth, but both are just under the U.S. average of 3 percent growth. The U.S. Bureau of Labor Statistics (BLS) cites job openings have fallen overall, but not within the construction industry. In November 2023 the job openings rate fell to the lowest since March 2021. However, there is still a strong disparity
between job openings and unemployment. “As interest rates went up in 2022, the job openings rate came down. That is good news for the labor market; it does mean the labor market is cooling and reduces the possibility of wage induced inflation,” stated Dietz. However, the skilled labor shortage persists. “In any given month, the construction industry is short about 400,000 construction workers,” said Dietz. The number of open positions waned this past year, but Dietz anticipates it to pick back up as single family construction ramps up. The labor force participation rate, the share of working adults who have a job or are looking for one, is not quite back to what it was before March 2020. “This is something we emphasize to policy makers in D.C. There are two ways to address a hot labor market: you can raise interest rates and cause businesses to higher fewer workers. That fights inflation and is the demand side approach. The supply side approach is getting more workers looking for jobs and fill the jobs,” said Dietz. “Right now, the focus is the demand side.” Dietz believes this approach and logic draws parallels with U.S. housing.
All About Inflation
According to Dietz, getting consumer inflation down to the Federal Reserve’s targeted two percent will take more time than it did going from 9 percent to 3 percent. The Federal Reserve held interest rates steady on Jan. 31. At that time, Chair of the Federal Reserve Jerome Powell did signal rates could fall in the coming months if inflation continues to cool. 12 | KCHBA.ORG | FEBRUARY ISSUE
