The global market outlook for Q3 2024 presents three possible scenarios for the U.S. economy: a no-landing scenario, a soft landing, or a hard landing [594c7be7]. The base case scenario is a soft landing, but there is still a 35% probability of a recession over the next 12 months [594c7be7]. Goldman Sachs Research economists predict that the global economy will outperform expectations in 2024, just as it did in the current year. They anticipate strong income growth, cooling inflation, and a robust job market. The decline in inflation seen this year is projected to continue into the next year. Central banks will have the flexibility to reduce interest rates if they are concerned about economic slowdown. Global GDP is forecasted to expand by 2.6% on an annual average basis, with the US expected to outpace other developed market peers. The economists are optimistic about avoiding a recession in major economies, with a low probability of a US recession in the next 12 months. The main reason for optimism is that central banks will work to bring down inflation without needing a recession [5acfda24]. Bank of America Securities analysts believe the U.S. economy is on the path to a 'Goldilocks' scenario in 2024, characterized by moderating but stable activity and decelerating inflation [188178bc]. They note that consumer price growth has been softer than expected and the latest jobs report indicates resilience in labor demand. The market has shifted its focus from interest rates to growth, and a solid retail sales reading is expected to alleviate concerns about wider economic activity. Several Federal Reserve officials, including John Williams, Neel Kashkari, Mary Daly, and Thomas Barkin, are scheduled to speak throughout the week. Chicago Fed President Austan Goolsbee expressed relief that price pressures in the U.S. showed signs of abating in May but emphasized the need for more months of easing data before considering rate cuts [188178bc]. Moody's Investors Service has lowered its outlook on the US credit rating from 'stable' to 'negative,' citing fiscal deficits and a decline in debt affordability [064e52b7]. Despite this, Goldman Sachs strategists predict a darkening outlook for the US dollar in 2024, but expect the currency to be supported by the strong US economy and high yields [064e52b7]. Goldman Sachs predicts that the global economy will exceed expectations in 2024, with a projected growth rate of 2.6% [02fdc77e]. This is higher than the consensus forecast of 2.1% by economists. The U.S. is expected to outpace other developed markets with an estimated growth rate of 2.1%. The investment bank also anticipates a recovery in global factory activity, as headwinds such as the European energy crisis and a weaker-than-expected rebound in Chinese manufacturing dissipate. Goldman Sachs is optimistic about real disposable income growth and expects a positive outlook for consumption and GDP growth. While rate hikes and fiscal policy will continue to impact growth, the worst of the drag is believed to be over. The Euro area and the UK are expected to experience a meaningful acceleration in real income growth by the end of 2024. Overall, Goldman Sachs is confident in a positive outlook for the world economy in 2024 [02fdc77e]. IG Wealth Management's 2024 Market Outlook predicts a degree of economic normalization in the year ahead. While some sectors may struggle, there is evidence of global economic recovery. The outlook highlights potential investment themes for 2024, including the self-correction of markets and the resilience of economies. The risks of a U.S. economic recession have decreased, while the Canadian economy faces greater risks due to interest rate increases. Inflation is expected to ease, leading to stabilizing interest rates and improved returns on bonds. The outlook suggests that the next year may see a broadening out of market breadth and positive equity gains for investors. The data points to a general sense of improvement in the global economy, presenting opportunities for investors [5da3c347]. According to Coface's Country and Sector Risk Barometer for June 2024, there has been a slowdown in US activity, with emerging countries acting as a relay for the global economy. Coface has modified its assessments for 5 countries (4 upgrades and 1 downgrade) and 26 sectors (20 upgrades and 6 downgrades). The global growth forecast for 2024 has been upgraded to 2.5%, with stabilization expected at 2.7% in 2025. The US economy has seen a slowdown, but labor market figures indicate a better balance between labor supply and demand. China's GDP growth in the first quarter of 2024 was 0.3%, indicating a potential rebound. Disinflation in Europe has slowed down, with persistently high prices of services and housing. Emerging economies may have to delay rate-cutting due to the Fed's cautious stance. US customs barriers on Chinese goods could lead to a trade war and higher costs for businesses [6b7e5eb7]. The US economy is predicted to fall into a recession in late 2024 or early 2025, according to strategists at BCA Research. They cite data from their kinked Phillips curve framework, which suggests a nonlinear relationship between inflation and unemployment. The framework indicates that once full employment is reached, rising wages and prices trigger a wage-price spiral that can only be halted by reducing aggregate demand. BCA is now tactically underweight on equities and expects the S&P 500 to drop to 3,750 during the next recession [8b8e78dc].
The highly anticipated soft landing is expected to take shape for the aggregated advanced economies in the second half of 2024. Global economic expansion is becoming less dependent on US exceptionalism, and convergence between services and goods consumption is easing inflationary pressures. The political trend towards protectionism and right-wing conservatism poses stability and upside inflation risks. The recent growth performance of the aggregated advanced economies was driven by the US, but Europe has returned to growth in the first quarter of 2024. Corporate earnings have been robust, with US earnings per share (EPS) growth outpacing that of the eurozone. Convergence between major advanced economies is expected to continue, driven by converging household consumption growth. The US consumer is expected to reduce spending due to depleted savings and a restrictive fiscal stance, while other major advanced economies are expected to experience a consumption pickup. The moderation in services demand should ease inflationary pressures. Rate cuts by major central banks are expected, but the impact may be limited. The move towards protectionism, such as tariffs on Chinese electric vehicles, and the rise of right-wing politics pose inflation and financial stability risks. The global expansion this year will be lower than the previous year, and a soft landing has been largely priced in by investors. A balanced view suggests a neutral equity allocation stance. The article also includes information on impact investing, plastic pollution, investing in the defence industry, and the need for improved environmental and social due diligence [6e0680eb].
According to a mid-year review of real estate predictions made in January 2024, the Southern California real estate market is performing as expected [39d67fb7]. The author analyzes three predictions: industrial lease rates softening, sales volume increasing, and no recession. The author provides evidence to support each prediction and discusses the current state of the real estate market. The article concludes with a prediction about interest rates falling and wishes the readers a safe and prosperous second half of the year [39d67fb7].