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Fifth District Firms Are Cautiously Optimistic About 2024 Despite Concerns

Regional Matters
January 11, 2024

At the start of both 2023 and 2024, we asked our business survey panelists about their expectations for the upcoming year. In our recent December survey, we found that most manufacturing firms were pessimistic about the U.S. economy going into 2024 but were more bullish about their own-firm prospects. Additionally, manufacturers were more likely than services firms to expect lower revenue, employment, spending, and price growth in 2024 than they experienced before COVID-19.

Fifth District Firms Remain Cautiously Optimistic About 2024 Prospects

Overall, Fifth District firms in both our manufacturing and service sector surveys were more likely to be optimistic than pessimistic about their firms' 2024 prospects. Among manufacturing firms that responded to the December survey, 48 percent were somewhat or very optimistic about their own firm compared to 26 percent that were somewhat or very pessimistic. Services firms reported similar levels of optimism, with 51 percent very or somewhat optimistic versus 22 percent that were somewhat or very pessimistic.

The shift in attitudes about own-firm prospects from last year largely reflects shifts in the neutral category. Manufacturing firms saw both pessimism and optimism increase in 2024, whereas the proportion of services firms being pessimistic was similar to 2023, but with a decline in optimism (56 percent versus 51 percent). Manufacturers became less neutral about their own prospects; services providers became more neutral.

Manufacturing Firms Were More Pessimistic About U.S. Economy Than Services Firms

When asked about the overall U.S. economy, manufacturing firms were more pessimistic than services firms. More than half of manufacturing firms (54 percent) were somewhat or very pessimistic about the U.S. economy compared to 40 percent of services firms. However, the proportion of manufacturers that reported optimism for 2024 increased from 2023 (20 percent in 2023 versus 25 percent in 2024). Services firms reported even higher levels of optimism this year compared to last year: Thirty-five percent of firms were optimistic for 2024 compared to 26 percent in 2023.

Many Manufacturing Firms Don't Expect Growth to Exceed Pre-COVID-19 Norms

We asked firms in our December survey to compare expected growth in 2024 to growth perceived as "normal," or pre-COVID-19. Despite the increased optimism relative to 2023, firms across sectors were likely to expect growth that falls below pre-COVID-19 norms. In addition, manufacturing firms were more likely to expect lower-than-normal growth in 2024 than services firms across variables. For example, 32 percent of manufacturing firms expected annual revenue growth to be lower than pre-COVID-19 compared to 15 percent of services firms. Additionally, 20 percent of manufacturing firms expected employment growth to be lower than pre-COVID-19 compared to 12 percent of services firms. These findings reflect what we hear in conversations with manufacturers across our district. Some manufacturers report slowing growth relative only to 2021, but quite a few, especially those tied to real estate markets, report growth that falls below what they would consider normal.


Firms remain largely optimistic about their prospects for 2024, and their outlook for the U.S. economy overall improved in the last year. Despite this overall optimism about their prospects, there are still quite a few firms — particularly in the manufacturing sector — that anticipate growth in 2024 to fall below what they would consider normal, pre-pandemic growth. As the year unfolds, the Richmond Fed will continue to use our business surveys and economic data to gauge the health of our region's economy and to the extent our respondents' expectations come to pass.

Views expressed are those of the author(s) and do not necessarily reflect those of the Federal Reserve Bank of Richmond or the Federal Reserve System.

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