Economic Outlook & Market Review 4Q24

KEY TAKEAWAYS:

1. The Fed’s recent 50bp cut indicates elevated concern around employment and confidence that inflation will continue to moderate. Labor markets remain historically robust but the trend in unemployment and job creation is troubling.
2. Elevated financing costs and low turnover in the housing market also pose a risk. Housing turnover is good for the economy and has positive long-term implications. By easing now, the Fed is trying to balance short term inflation risk with longer term positive economic impacts.
3. Global central banks have broadly switched to monetary easing. China just announced a comprehensive stimulus package that may finally help re-energize Asian growth.
4. We believe the prospect for stocks into year-end is positive. Lower interest rates ease capital constraints and typically support valuation. Investors should benefit from a diversified portfolio as stock market breadth improves outside the largest technology names which have dominated returns over the past few years.