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Market Recap – January 2, 2024

Keel Point

January 2, 2024
As we greet the new year, the U.S. economy looks very much like it is back to “normal.” The pandemic related disruption to supply chains and labor shortages, fiscal and monetary policy efforts to protect businesses and consumers which contributed to inflation, and the Fed’s efforts to combat inflation by raising interest rates and restricting monetary policy are now in the rear-view mirror. 

  • Real U.S. economic growth, which was 5.2% (annualized rate) in the third quarter, is projected to be 2.6% for 2023. The outlook for 2024 is for slower but steady growth in U.S. GDP (Fed).  The probability of a 2024 U.S. recession is 25%, down from 50% a year ago.
  • The range of 2024 U.S. GDP growth forecasts is surprisingly narrow: 2% (Capital Economics), 1.4% (Fed), 1.9% (Bus RT CEOs) and 2.1% Goldman Sachs.
  • Recession danger is in the cumulative, lagged impact of Fed tightening and the Fed waiting too long to start cutting with core PCE inflation annualizing at 1.9% over the past 6 months.
  • An economic growth upside surprise is also possible with rising consumer sentiment in households which are still buffered with excess savings, legacy low-rate mortgages, low unemployment, rising wages and continuing growth in purchasing power.
  • A December 14, 2023, U.S. Treasury report on the strength of U.S. consumers points out: real wages have risen since before the pandemic across the income distribution; household purchasing power has increased because median earnings rose faster than prices; and the U.S. economy now has 2+ million more jobs than pre-pandemic forecasters expected.
  • More CEOs of America’s largest companies plan to add workersthan just three months ago, according to a new survey of 141 CEOs conducted by the Business Roundtable. (Axios).

Top Google searches in 2023 reported in Axios: Taylor Swift, Donald Trump, Ukraine, and President Biden were consistent leaders through the year.  Top short-time high search interests were Buffalo Bills safety Damar Hamlin’s on-field collapse, Israel attack by Hamas on October 7, Titan tourism submersible, death of actor Matthew Perry, and Barbie movie.

The S&P 500 was up 24.23% in 2023 after a 19.4% decline in 2022.  Including dividends, the S&P 500 total return in 2023 was 26.29%.

 

Disclosure:  Securities offered through Keel Point Capital, LLC, Member FINRA and SPIC.  Brokerage and Investment Advisory Services are offered under the Keel Point brand. Investment Advisory Services offered by Keel Point, LLC, an affiliate of Keel Point Capital, LLC. While reasonable efforts have been made to provide data from sources considered to be reliable, no guarantee of accuracy is given. Keel Point does not give tax, accounting, regulatory, or legal advice to its clients.

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