The Higgins Report: End-of-the-Year Stunner

Sixty days that changed the economy’s course

By Joe Higgins, Quest 4 Quality

Some readers will think I’m ahead of my skis when I say this, but the past 60 days have given me hope that our economy is now on track to higher growth without inflation.

The most recent economic numbers tell a story that we all need to hear — about the resilience, productivity and diversity of the U.S. economy, and how we made it through an especially challenging time and prospered despite the threat of recession. 

It is important to note that the Federal Reserve has spent the last 22 months trying to slow down consumer spending by hiking the Fed fund rate to 5.25%. But in an unprecedented response, consumers ignored the higher rates and kept on buying. 

It all started with the release of the gross domestic product report on October 26, 2023. Economists and big banks had forecasted an imminent recession. The expectation that consumers would exhaust their savings was real, and the pundits predicted that spending would collapse. But the experts were stunned when the third-quarter GDP hit its highest level in two years, at 4.9%. Not only was this an impressive performance, but it was also one of the best growth quarters in two decades. What’s more, the Atlanta Fed’s “GDP Now” forecast pegged growth at 2.8% in Q4.  

And, as I like to point out, if GDP grows, all boats will rise together. 

Forty-five days later, in mid-December, the Bureau of Labor Statistics released the unemployment report for November, which showed that the percentage of Americans out of work had fallen from 3.9% to 3.7%. This level of unemployment represented a 50-year low, following three years of unprecedented employment gains. For all of 2023, unemployment averaged 3.5%, the lowest figure since 1969.

A week later the Census Bureau released its November retail sales numbers, which showed a 4.1% increase after 12 months of significant gains. That’s right — the Fed was raising interest rates to slow down consumer spending, and yet Americans were busy buying up goods in stores and online, supporting our fragile economy. 

The Consumer Price Index came out that same week and hit us like a 100 mph fastball. The CPI had topped out at 9.1% in June 2022, and then over the next 18 months fell to 3.1%. The price decline is unprecedented, and reflects improvements in our supply chain and increased production of goods and services that tamped down inflation. It is clear today that the Fed’s interest rate hikes may have helped, but they were not the primary reason inflation cooled so quickly.

Then, just a few days later, the Fed announced it would probably pause any further interest rate increases and hinted it might even cut rates in 2024. After 22 months and 525 basis points of rate increases, the U.S. economy now has the energy to move on from inflation. It is almost like coming out of a harsh winter and seeing the sun for the first time in months.

This set off a firestorm. The Dow hit an all-time high of 37,000, and the S&P 500 and Nasdaq are single-digit percentage points away from their best performances ever. And if that wasn’t enough, 30-year home mortgage rates fell from 8.5% in October to 6.95% by year’s end, and single-family housing starts jumped 42%. These falling mortgage rates and the rise in new single-family housing starts are just what consumers need to get into that home they could only dream about for the last five years. Mortgage applications were up almost 20% by the end of December, and I think that number will continue to grow as more homes come on the market. 

The Bottom Line

There have been many dire predictions about the fate of our economy over the past two years. In all that time, the Commerce Department’s monthly reports never indicated a recession or even a mild slowdown. If you look back since the post-pandemic downturn in 2020, the numbers have been quite positive. Combined with all that’s happened in the last 60 days, BrandSource dealers can confidently look toward the new year with optimism. 

Happy 2024, everyone!

Joe Higgins is a 46-year veteran of GE and Whirlpool Corp. who brings his executive experience to bear as a business consultant, AVB keynoter and YSN contributor. Visit his website, Quest 4 Quality with Joe, at

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