2024: A Year of Inflation & Mixed Data
With 2025 of Tariffs & Slowing Labor Market
As we wrap up 2024, we want to take a moment to express our deepest gratitude to all our readers, viewers, and supporters. This year has been extraordinary for the Coastal Journal as we expanded our community, introduced new content, and strengthened our commitment to delivering the best analysis and information you can only find here—from coast to coast.
Our growth in 2024 was fueled by your engagement with our articles, financial white papers, and weekly economic recap clips. These offerings have helped us create a platform where ideas and insights thrive, providing clients the tools to navigate an increasingly complex economic environment. As we enter the holiday season, we celebrate not only the joy of the moment but also the achievements and challenges that have shaped this incredible year.
Economic Highlights and Insights
This final week of 2024 brings a significant development: the Federal Reserve is expected to lower short-term interest rates by 0.25%. While lower rates might sound promising for borrowers, their effect on the real economy is more nuanced. For instance, 30-year mortgage rates, which influence the housing market most directly, depend on the behavior of the long-term bond curve—not just the Fed’s short-term rate decisions.
Over the past year, we’ve seen long-term bond yields decline. A year ago (2023), the 10- and 20-year Treasury yields were hovering around 5.5%, compared to 4.5% today. However, inflation and labor market dynamics have created unexpected ripples across the yield curve, offering opportunities for investors to diversify their fixed-income portfolios.
Key Trends and 2024 Economic Realities: A Deep Dive
1. Sticky Inflation and Rising Rates
Despite rate adjustments throughout 2024, inflation has refused to retreat to the Federal Reserve’s 2% target. The Consumer Price Index (CPI) showed inflation persistently hovering around 3% all year in 2024, with energy and food prices contributing significantly. This stickiness in inflation has squeezed household budgets and eroded purchasing power.
2. Recession Signals in Manufacturing
The manufacturing sector is in freefall, with output contracting at its steepest pace since May 2020. The S&P Global Flash Manufacturing Index dropped to 48.3, well below the 50 threshold, which marks the line between growth and contraction. This marks the sixth consecutive month of decline, with production, new orders, and inventories all plummeting.
Notably, manufacturing job losses exceeded 20,000 per month in the latter half of 2024, as companies scaled back in response to weakening demand. The sector’s performance this year represents the steepest deterioration since the 2009 financial crisis, underscoring the fragility of goods-producing industries.
3. Real Estate at a Standstill
Mortgage rates, at their highest in 25 years, have pushed the real estate market into a gridlock. The 30-year fixed mortgage rate, which peaked at 8%, has stagnated home-buying activity to levels not seen since the Great Recession. Existing home sales fell by 15% year-over-year, while new housing starts were down 20% compared to 2023.
In regions like the Pacific Northwest and parts of the Midwest, home prices have corrected by 5-8%, with sales volumes down significantly. Even in areas where prices have not declined sharply, record-low demand has kept many homes on the market for months longer than average.
4. Labor Market Softening
The labor market, long touted as a pillar of strength, is finally showing cracks. Net job creation has slowed to a crawl, with monthly job gains averaging 120,000 in the second half of 2024, compared to 320,000 in 2023. Meanwhile, part-time and gig work have surged, reflecting a growing trend of workers taking multiple jobs to offset rising costs.
The unemployment rate rose to 4.2% in December, up from 3.6% in January, marking a significant reversal. Particularly concerning is the increase in long-term unemployment, which now accounts for 30% of all unemployed individuals. The drop in labor force participation, down to 61.5%, has further exacerbated the situation, leaving the economy with a smaller productive workforce. (meaning even the economy is adding jobs each month, more and more people are not working, while the number of people with multiple jobs are rising)
Job openings declined for the fifth consecutive month, with job vacancy rates plunging 25% year-over-year. This sharp contraction in labor demand means more unemployed individuals are competing for fewer opportunities, a scenario that could worsen into 2025 if economic conditions continue to deteriorate.
(Following data shows declining Job Openings with rising continued unemployed)
Implications of 2024 Data
The Federal Reserve’s expected .25% rate cut reflects a growing recognition that the economy is losing steam. Yet, the interplay between sticky inflation and a weakening labor market puts the Fed in a precarious position: cutting rates may help stave off a deeper labor recession but risks re-igniting inflationary pressures.
In the meantime, key segments of the economy—manufacturing, real estate are already sounding the alarm, and the labor market is flashing warning signs of systemic weakness. As these trends converge, 2025 could bring heightened volatility, necessitating prudent financial planning and diversified investment strategies.
As always, the Coastal Journal remains committed to providing the critical insights you need to navigate this challenging environment. Stay informed and stay prepared.
A Look Back: Coastal Journal’s Standout Content in 2024
This year, we delivered critical analysis on themes that were massive hits:
• Inflation’s Resilience: Our articles detailed why inflation would remain “sticky,” helping investors navigate volatile markets.
• Gold and Silver’s Historic Year: Precious metals outperformed, validating our early insights into their role as inflation hedges.
• Mission Impossible for the Fed: We highlighted the central bank’s challenges in balancing inflation control and labor market stability.
• The Collapse of Super Micro: Through investigative reporting, we exposed the company’s financial vulnerabilities months before its stock price plunged.
As we enter 2025, new challenges await, including the potential return of tariffs under President Trump’s administration ( as written about here The Return Of Tariffs . ) Our analysis on the macroeconomic implications of such policies remains critical reading for anyone preparing for an unpredictable year ahead.
Looking Forward to 2025
Volatility is likely to define the year ahead. Between geopolitical uncertainties, the continuation of sticky inflation, and structural shifts in the global economy, there has never been a greater need for trusted analysis. Our mission is to remain your go-to source for cutting-edge economic insights and actionable intelligence.
As we head into the Christmas and holiday season, we wish you and your loved ones a joyous celebration and a prosperous New Year. Your support makes everything we do possible, and we look forward to serving you in 2025.
Stay informed. Stay prepared. Stay with the Coastal Journal.
Warm regards,
The Coastal Journal Team
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