What to Expect from the Economy in 2024
U.S. Chamber of Commerce
Curtis Dubay
December 20, 2023
A smaller workforce will define the economy in 2024. In fact, it will be the key economic challenge we face for the foreseeable future. A shortage of workers will be hard on businesses, but for some consumers it also means they will always be able to find a job that can support their spending. That will put a floor under any economic weakness in 2024.
Smaller Workforce Is Key to Understanding Future Economic Trends
Our workforce is too small because of simple demographics. The Baby Boomer generation was more than three times larger than the generation that came before it, the Silent Generation. As the Boomers entered the workforce in the early 1960s, labor force participation rose sharply.
However, the following generation, Generation X, was smaller than the Boomers. The Millennial Generation is only slightly larger than the Boomers, and Generation Z is slightly smaller than the Millennials.
This has created a demographic shortfall for the workforce. For economic growth, it is ideal for succeeding generations to be larger than the ones before them. Visualized, it should look like a triangle, with younger generations being larger than the ones that came before. Instead, we have an inverted triangle.
This means that as Boomers retire and exit the workforce, there are not enough workers in the younger generations to fully replace them. Boomers will still be spending and consuming, so businesses will still need to meet strong demand, but they will have to do so with a smaller pool of workers.
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