Falling inflation could improve net demand, portending better seafood sales in 2024, according to Bank of America Managing Director and Chief Investment Office Macro Strategy Head Tim McGee.
Speaking at the 2024 Global Seafood Market Conference, taking place in Orlando, Florida, U.S.A. from 23 to 25 January, McGee said election-year economic moves by the administration of U.S. President Joe Biden and by the U.S. Federal Reserve focused on getting Americans to feel better about the economy will pay dividends for the seafood industry.
“Right now we're in a sweet spot where inflation is coming down and this is one of the reasons why volumes of things like seafood are likely to increase [over the] next year,” he said.
Between October and December 2023, the Fed completed a pivot from tightening fiscal policy by raising interest rates to loosening it by promising to lower them, resulting in a reversal of the U.S. economic forecast to 2.5 percent growth in 2024, according to a blue-chip survey of economists cited by McGee.
“When the Fed did its pivot, we saw the most dramatic improvement in financial conditions that we've seen by some measures in history,” he said. “So what that means is that the stock market's taken off again, the outlook for the economy is [up].”
McGee said it looks like the U.S. economy avoided a recession predicted for 2023 by achieving a so-called “soft landing,” echoing the declaration made by U.S. Treasury Secretary Janet Yellen in on 5 January.
“Wage increases are running over price increases now. American workers are getting ahead and the progress for the middle-income families is very noticeable,” Yellen told CNN. “The path the labor market and economy and inflation have followed suggests [the Fed] made a set of good decisions.”
McGee said while the U.S. debtload is concerning, the growth outlook is picking up.
“As inflation comes down and as wages go up to make up for past inflation, the gap between wages and current inflation is favoring higher real wages, which makes it possible [for consumers] to buy more volume of seafood and everything else,” he said. “The consensus is we’re catching up to this about face that we saw in Fed policy.”
Photo by Chris Chase/SeafoodSource
