Economic Outlook & Market Review 2Q24
4-28-24
KEY TAKEAWAYS:
- The US economy continues to grow and has pulled most of the developed world into a largely benign growth environment.
- A sustained US expansion is built on a strong labor market, sound private sector financial metrics, and continued fiscal spending.
- Markets are pricing in interest rate cuts beginning this summer, but we believe longer-term rates will remain elevated given the growing federal deficit and inflation that remains above the Fed’s target. The path for interest rates holds significant implications for 2024.
- Companies that can maintain earnings growth should fare better in this environment and diversification should benefit investors as index leadership is likely to broaden away from large tech companies.
Over the last few years, the U.S. economy has been like the little blue engine in the 1930 folk tale The Little Engine That Could. Much like the storied blue engine, the economy has overcome conventional wisdom, scaling post-COVID challenges and in the process pulled the developed world into a benign growth environment. Recent economic releases suggest inflation is cooperating and global growth, ex China, is improving.