Economics Roundup: What You Need to Know for October 2024

Welcome to Economics Roundup: What You Need to Know, from The Conference Board Economy, Strategy & Finance Center.

This month, we spotlight two reports from Electrical Vehicle Insights—our new hub for expert insights on the rise of EVs in an economic, geopolitical, and environmental context.

Then, explore fresh data and analysis from our latest US growth forecast update, our CEO Confidence Survey for Q4, and October's Consumer Confidence Index reading.

ELECTRIC VEHICLE INSIGHTS »

Global EV Insights: Will Electric Vehicles Meet the Urgent Need to Decarbonize Transportation?

Global vehicle markets have mostly committed to electric vehicles as the preferred strategy to decarbonize transportation. But EV adoption varies substantially across regions—and may not significantly reduce greenhouse gas (GHG) emissions in the near term because there are only a few economies, such as China, where EVs make up more than half of new vehicle sales.

The first report in our Electrical Vehicle Insights series provides an overview of the main success factors for and constraints to a thriving global EV industry:

• Global EV sales have accelerated in recent years, to 18% of all vehicles sold worldwide in 2023. Falling battery and component prices, competition in several national automobile markets, and favorable economic conditions have all fueled this surge.
• But as a share of total vehicle stock, EVs still only accounted for 3.2% of all vehicles globally in 2023. Even if EV sales increased to nearly 100% of car sales within the next two decades, GHG emissions from transportation might fall only slowly because of the slow phaseout of internal combustion engine (ICE) vehicles and the long lifespan of existing cars.
• China has established itself as the dominant EV producer globally, and low-cost EVs will likely put pressure on national economies and erode profit margins for domestic legacy manufacturers.
• EV adoption in the US and EU may plateau due to market constraints, battery component origin requirements, and trade barriers. But any slowdown will likely be temporary as EVs rapidly achieve (and exceed) price parity with ICE vehicles and charging networks expand in many national markets.

Read the report »

Visit the EV Insights hub »

Policy Backgrounder: China and Electric Vehicles

China, the world’s largest seller of and market for electric vehicles, is rapidly expanding its global ambitions for EV exports—which has already attracted an investigation from the European Commission. Sales of Chinese EVs have expanded rapidly in the European market thanks to their relatively low cost, which the EU alleges results from high subsidies.

Committee for Economic Development, our public policy team, details the implications of China's EV mastery for both sides of the Atlantic:

• China’s dominance of supply chains related to global EV production fuels its global ambitions and makes it more difficult for EU and US automakers to compete.
• The slowdown in China’s economy is also pushing Chinese companies to expand.
• While the United States' 27.5% tariff on China’s markets currently deters the ambitions in the US, the EU’s decision to ban the sale of cars with internal combustion engines by 2035 is putting great pressure on European automakers to adapt, starting from a higher cost base.

Read the report »

Visit the EV Insights hub »

ECONOMIC REPORTS & INSIGHTS »

US Economy Displays Continued Resilience

US economic data continue to surprise to the upside, revealing ongoing resilience despite looming uncertainties and persistent shocks.

We expect real GDP to expand by 2.6% year-over-year in 2024, as the economy grew at a robust clip in Q3 2024, and the labor market is healthy. While underlying inflation remains a tad sticky, overall inflation is hovering just above the Fed’s 2-percent target.   

Possible Q4 soft patch: The economy may still lose some momentum at the end of this year reflecting continued dampening effects on housing from high prices and interest rates, hurricane impacts, and net exports and inventory drags.

Moderation at yearend and in Q1 may constrain the 2025 rate of expansion to 1.7%. Additionally, lingering uncertainty about, or even changes in, tax and trade policies and the regulatory environment could dampen growth.

Nonetheless, we expect quarterly annualized real GDP growth to strengthen over the course of next year. Stabilization of inflation at target, a healthy labor market, and notably lower interest rates (i.e.,  reduction of the Fed Funds rate target range to 3.00-3.25% by mid-2025) support a faster expansion by end-2025.

Read commentary "Strong Growth, Slowing Inflation, Fed Dilemma" »

Read the US Forecast Update for October 2024 »

CEO Confidence Retreated Slightly in Q4 2024

The Conference Board Measure of CEO Confidence™, in collaboration with The Business Council U.S., fell to 51 in Q4 2024, down from 52 in Q3 2024.

After hitting a two-year high of 54 in Q2 2024, the Measure has now weakened for two consecutive quarters. CEOs remain on balance optimistic—though just barely. (A reading above 50 reflects more positive than negative responses.)

CEOs less sanguine about their own industries: Views about the overall economy—both now and six months hence—were little changed in our Q4 survey. But CEOs were substantially less optimistic about conditions in their own industry. Only 31% of CEOs expected conditions in their own industry to improve over the next 6 months, down from 42% in Q3.

That said, most CEOs still plan to grow or maintain the size of their workforce over the year ahead, though the proportion anticipating a net reduction in payrolls drifted higher, to 26%.

Risks: Cyber threats continue to loom largest on CEOs’ radar: In Q4 2024, 60% named cyber a high-impact risk to their industry. That’s unchanged from a year ago.

But, over the past year, there has been a sharp uptick in CEOs concerned about geopolitical instability (52%, up from 42% in Q4 2023) and legal and regulatory uncertainty (50%, up from 44%)—which may explain decreasing confidence about prospects in their own industries.  

Read the full report »

US Consumer Confidence Bounced Back in October

The Conference Board Consumer Confidence Index® increased in October to 108.7 (1985=100), up from 99.2 in September.

The Present Situation Index rose 14.2 points to 138.0. The Expectations Index rose 6.3 points to 89.1, well above the recession threshold of 80.

Regained faith in the economy: Most notably, views of current labor market conditions rebounded in October after several months of weakness.

Compared to last month, consumers were substantially more optimistic about future business conditions, remained positive about future income prospects, and—for the first time since July 2023—expressed some cautious optimism about future job availability.

The TCB take: October’s surge was the strongest monthly gain since March 2021, and the proportion of consumers anticipating a recession over the next year dropped to its lowest level since July 2022—the first month we asked this question.

But overall, consumer confidence still has not broken out of the narrow range that has prevailed over the past two years.

Read »

PODCASTS »

The State of the Economy for October 2024

Consumer confidence saw the strongly monthly gain since March 2021, according to The Conference Board Consumer Confidence Index®.

Consumers’ assessment of current business conditions and job availability, plus future business conditions, income, and job availability, all climbed this month. 

Join Chief Economist Dana M Peterson and Senior Economist Erik Lundh to find out where US consumers stand ahead of next week’s elections. Then join them for a tour of the global economy, including updates on European and China growth, inflation, and interest rates.

Listen to the C-Suite Perspectives episode »

WEBCASTS »

AI Electricity Demand & Mexico's Reshoring Strategy

This month's Economy Watch dives into two crucial topics that are set to shape the business landscape for years to come:

• AI’s Energy Surge: As demand for data centers and computing power for AI skyrockets, what does this mean for electricity usage? Could this overwhelm the US grid? We’ll explore the potential impacts on businesses.  
• Mexico’s Manufacturing Renaissance: With reshoring gaining momentum in North America, Mexico is positioning itself as a key player. How is this shift reshaping the economy, and what are the implications for businesses?

ECONOMY WATCH | Watch on demand »