Economy, weather, and CO₂

U.S. macroeconomics
Our forecast assumes real GDP will grow by 2.5% in the United States in 2024, unchanged from the forecast in May. We revised the forecast for 2025 lower by 0.3 percentage points to 1.6%. According to the U.S. Bureau of Economic Analysis, GDP grew at an annual rate of 1.3% in 1Q24, slower than the annual growth rates of 4.9% in 3Q23 and 3.4% in 4Q23.

Despite U.S. GDP growth slowing over the forecast, the labor market continues to show strength. In the January 2024 STEO, we had assumed that about 200,000 jobs would be added to U.S. non-farm employment in the first five months of 2024. However, more than 1.2 million jobs have been added over that period, according to the U.S. Bureau of Labor Statistics, and our forecast assumes 1.0 million more jobs will be added by the end of this year. In contrast, we expect that employment growth will slow in 2025, increasing by less than 500,000 jobs from December 2024 to December 2025. Accompanying slowing employment growth, our forecast assumes the U.S. unemployment rate will remain near 3.8% through 2024 and rise above 4.0% by the end of 2025.

The macroeconomic forecasts are based on S&P Global’s macroeconomic model. We incorporate STEO energy price forecasts into the model to obtain the final macroeconomic assumptions.

Emissions
We expect U.S. energy-related carbon dioxide (CO₂) emissions to be relatively unchanged in 2024 from 2023 and to decrease by almost 1% in 2025. We forecast CO₂ emissions from natural gas rise by 1% in 2024, offsetting a similar decline in coal emissions. Petroleum emissions are unchanged as increasing jet fuel consumption offsets falling emissions from diesel fuel and gasoline. We expect slightly less total CO₂ emissions in 2025 compared with this year.

CO₂ emissions vary for some fuels seasonally as well as annually. One notable example is motor gasoline, which makes up about half of U.S. energy-related petroleum emissions. Although we do not expect annual emissions from motor gasoline to change significantly over the forecast, they do vary noticeably within the year. Namely, motor gasoline emissions are typically highest during the summer season (the second and third quarters of the year) because this is a popular time for vacation and travel. We forecast 6% more motor gasoline CO₂ emissions for this period than in the first quarter and 3% more than in the fourth quarter for both 2024 and 2025.

Weather
Our forecast assumes a warmer summer (June–September) in 2024 than in 2023, translating to more U.S. cooling degree days (CDDs). We expect 246 cooling degree days in June, 17% more CDDs than in June 2023, with 5% more CDDs in the entire summer of 2024 than in 2023. We also expect a warmer summer in 2025 with about 3% more CDDs during the summer in 2025 than during the same period in 2024. We expect a slightly cooler heating season this winter (November–March), with 6% more heating degree days (HDDs) overall. We expect 9% more HDDs in 4Q24 than in 4Q23 and 5% more HDDs in 1Q25 than in 1Q24.