Recently released data indicates the labor market remains strong. Meanwhile, a recent statement by a Federal Reserve president left me more convinced than ever that the central bank plans to cut interest rates multiple times in 2024. All of these developments are very positive for the economic outlook in the new year. Also boding well for the economy and stocks is Goldman Sachs’ (NYSE:GS) belief the global economy will be stronger than many expect this year.

However, on the negative side, at least one analyst agrees with my contention that U.S. housing prices will likely fall significantly in 2024.

Still, I believe the overall outlook for the U.S. economy and American stocks remains upbeat.

The Labor Market and the Economy Are Still Strong

In November, the economy added an impressive total of 199,000 positions, way up from the 150,000 net jobs gained in October. What’s more, the unemployment rate dropped to 3.7% in November from 3.9% the previous month. With the unemployment rate down, it’s clear the labor market is still generally strong. As a result, the chances of a recession occurring in 2024 are quite low.

Also making a recession unlikely are two other developments pointed out by Fundstrat analyst Tom Lee, who famously made a great bullish and accurate call about the stock market at the beginning of 2023 in the face of so much pessimism.

Specifically, Lee is now noting that purchasing managers’ indexes “are bottoming. That leads to a cyclical earnings recovery.”

Moreover, he pointed out that last quarter, excluding energy companies, the earnings of S&P 500 firms jumped 10% versus the same period a year earlier.

Finally, Goldman Sachs in November predicted the global economy would grow more rapidly “than many expect in 2024,” with a manufacturing comeback and interest rate cuts providing positive catalysts.

The Fed Is Definitely Ready to Cut Rates

On Dec. 18, San Francisco Fed President Mary Daly provided the strongest indication yet that the central bank is preparing to cut rates next year.

Specifically, Daly noted she expects the Fed to cut rates around “three times” in 2024 and stated “rate cuts would be appropriate to prevent inflation-adjusted or ‘real’ rates from rising.” The Fed president also emphasized the central bank must begin worrying more about unemployment going forward. Such a change in its outlook would naturally result in multiple rate cuts in 2024.

Tom Lee, the analyst who in January 2023 unveiled an accurate S&P 500 target, recently said the “Fed just wants to keep the business cycle happy, and that gives them room to cut rates [in 2024].”

In past columns, I’ve stated the central bank wants to help President Joe Biden get reelected, so I could not agree with Lee’s statement more.

The Housing Storm Cloud

On Dec. 28, housing analyst Meredith Whitney, who correctly predicted the 2008 stock crash, articulated a similar theory about the housing sector as I did in a previous column. Specifically, Whitney believes lower interest rates will cause many Baby Boomers to sell their homes and buy smaller houses. As a result, Whitney, like me, expects housing prices to fall meaningfully.

It’s unclear if Whitney expects this phenomenon to start in 2024. However, I think it will begin in the second or third quarter of next year.

Still, given the strength of other areas of the economy and the lack of the same huge investments by large banks in housing in 2007, I don’t expect the decrease in housing prices to derail the economic expansion.

On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.