Despite predictions of a slowdown for the US economy, Sunbelt and Mountain West states are thriving. This is because of rising populations and expenditures on electric cars and semiconductor manufacturing infrastructure. Georgia received a $5 billion investment from Rivian, while Arizona is getting money from Intel and a Taiwanese chip firm called TSMC.
The Federal Reserve’s relentless rate rises to their two-decade highs of 5.25 to 5.5% have taken a toll on the cost of capital and discouraged company investment. As predicted by Wells Fargo experts, the growth rate is expected to slow to 0.8% in 2024 from 2.4% this year. These states will be better prepared to withstand an economic downturn because of the influx of people drawn there by more excellent employment prospects, warmer temperatures, and lower living costs.
Population expansion reduces economic uncertainty since more people necessitate greater production of goods and services, which necessitates more employment opportunities. Economic expansion is a byproduct of population growth.
However, interest rate-sensitive companies like the technology industry are concentrated in West Coast areas. The Federal Reserve’s fight against inflation has resulted in the most rapid rate increases since the 1980s, causing havoc for industries that rely heavily on debt.
Population loss intensified during the epidemic and has not been fully reversed in New York and other East Coast states. Rising interest rates and soaring property prices drove many Americans out of pricey East Coast and West Coast cities and into more affordable suburban communities.
According to Wells Fargo’s projections, the economy would contract for two consecutive quarters in 2024, with annual growth of less than 1%. Until inflation consistently reaches the Fed’s objective of 2%, which might happen as early as 2025, the unemployment rate is predicted to rise slowly, peaking at 4.5% by the end of 2024.
