People look into the crystal ball of the market because they seek to understand the environmental/economic changes that will impact their strategic options. Knowing what to do and when to do it is worth a lot of money to people who rely on business intelligence. Investors and businesses want to feel confident as to where they can reallocate resources to maximize investment outcomes. That level of strategic decision making requires sophisticated predictive analysis. Forecasts are a type of advance notice system.
(Morgan Stanley indicated that it expects the S&P500 to increase in 2024 Reuters: Morgan Stanely 2024 Projection which would fall in line with Goldman Sachs on at least some levels. I did not yet take a look at the similarities and differences.)
-Increasing economic growth
-Reduced inflation
-Global unemployment is down to below pre-Pandemic levels.
-US probability of recession is lowered to 15%.
-GDP in US is expected to slow to above 2% while Europe and UK are likely to accelerate. Consider that financial policy drag will be lower in 2024.
-Movement of industry toward service. Manufacturing long term levels return.
-Recession may not be necessary to bring inflation down (Keep this in mind because it could be related to economic market homeostasis. Would this be new or old homeostasis will depend on historical and emerging economic data. One has to first develop a type of trend and that takes time to establish. The market had initial chaos during the Pandemic but seems to have narrowed its wide swings to a more normal range of variance. Where countries settle into that new "Normal" indicates long term position and prospects. The U.S. may be a unique case if manufacturing, innovation and human capital lead to broad based growth that raises long term GDP -physical and digital.)
-Developed countries unlikely to cut interest rates until the 2nd half of 2024.
-Supply demand labor to be more in balance (Where we should maximize technology and human capital)
-Adaptation of AI and the economic benefits that come from that (We might call this widespread movement into the Information Age/Digital Era that was launched officially by the Pandemic and large swings in virtual work. 10+ years before its time.)
-Notice world growth is seen as 2023 2.7%, 2024 2.6% and 2025 2.7%. The U.S. is 2023 2.4%, 2024 2.1% and 2025. That means the projection includes a dip each year while world growth is relatively unchanged. (While I didn't see it specifically it could have to do with lower government intervention and thus market distortion. 2025 is a long way off but that is one possible influence so we should expect some market normalization.)This opens a question of why this dip exists? Let us see...
a.) When looking through the Macro Outlook 2024 one can see positive trends based what the analyst is discussing in the 'There's Just No Need for a Recession' around pg. 10 and the four reasons for optimism. Having a lower projection is interesting and might be based on additional background metrics, dashboards, and algorithms used to make such assessments. This is likely what creates much of the value for forecasts and those that can do them.
b.)There are some risks of the unknown as listed in the 'Elevated Uncertainty' section on pg. 18. Data volatility and higher then normal long term risks mentioned. They move on to further discuss inflation rate, manufacturing, and geopolitical issues that create levels of risk. Investment returns on bonds and such should be lucrative.
-The report discusses that we may be in a more "normal" and stable market. (Is this a new homeostasis and is it different when compared to the last era and/or few decades? Likely too short to tell in the long run but could indicate increased stability. Other factors could be impacting the pace in which the market is normalized.)
-Reduced inflation
-Global unemployment is down to below pre-Pandemic levels.
-US probability of recession is lowered to 15%.
-GDP in US is expected to slow to above 2% while Europe and UK are likely to accelerate. Consider that financial policy drag will be lower in 2024.
-Movement of industry toward service. Manufacturing long term levels return.
-Recession may not be necessary to bring inflation down (Keep this in mind because it could be related to economic market homeostasis. Would this be new or old homeostasis will depend on historical and emerging economic data. One has to first develop a type of trend and that takes time to establish. The market had initial chaos during the Pandemic but seems to have narrowed its wide swings to a more normal range of variance. Where countries settle into that new "Normal" indicates long term position and prospects. The U.S. may be a unique case if manufacturing, innovation and human capital lead to broad based growth that raises long term GDP -physical and digital.)
-Developed countries unlikely to cut interest rates until the 2nd half of 2024.
-Supply demand labor to be more in balance (Where we should maximize technology and human capital)
-Adaptation of AI and the economic benefits that come from that (We might call this widespread movement into the Information Age/Digital Era that was launched officially by the Pandemic and large swings in virtual work. 10+ years before its time.)
-Notice world growth is seen as 2023 2.7%, 2024 2.6% and 2025 2.7%. The U.S. is 2023 2.4%, 2024 2.1% and 2025. That means the projection includes a dip each year while world growth is relatively unchanged. (While I didn't see it specifically it could have to do with lower government intervention and thus market distortion. 2025 is a long way off but that is one possible influence so we should expect some market normalization.)This opens a question of why this dip exists? Let us see...
b.)There are some risks of the unknown as listed in the 'Elevated Uncertainty' section on pg. 18. Data volatility and higher then normal long term risks mentioned. They move on to further discuss inflation rate, manufacturing, and geopolitical issues that create levels of risk. Investment returns on bonds and such should be lucrative.
-The report discusses that we may be in a more "normal" and stable market. (Is this a new homeostasis and is it different when compared to the last era and/or few decades? Likely too short to tell in the long run but could indicate increased stability. Other factors could be impacting the pace in which the market is normalized.)
-Higher return on non-cash assets.
-Eventually we come to the section "Surviving Higher Rates" and find that higher than standard interest rates may impact the U.S. economy. They also mention that small business financing can be impacted because of cost of borrowing (A balanced system needs lots of new businesses of each type growing, changing, dissolving, building, splitting, etc. to create higher levels of GDP growth through innovation and wealth recycling that leads to more social mobility.).
-Eventually we come to the section "Surviving Higher Rates" and find that higher than standard interest rates may impact the U.S. economy. They also mention that small business financing can be impacted because of cost of borrowing (A balanced system needs lots of new businesses of each type growing, changing, dissolving, building, splitting, etc. to create higher levels of GDP growth through innovation and wealth recycling that leads to more social mobility.).
-The case for U.S. growth outperformance was strong.
Side note: I'm doing some economic research from a theory I half invented but likely borrowed parts some from other people (innovation and research is additive) as it relates to Transactional Innovative Cluster Theory. The theory is based on trying to understand the subfactors that lead to macro outcomes in a industry-industry, industry-society/organic or industry-government investments that lead to higher levels of innovation and economic growth. What I was interested in seeing is if COVID pushed the U.S. into a Digital Era (like the Industrial Revolution) where such micro transactions increase in a way that improves advanced innovative economic outputs. In this particular case, whether post COVID US economy will have a new equilibrium that is on a higher growth state for mature economies through innovation and adaptation (i.e. advanced manufacturing and knowledge creation. A type of renaissance in science and technology that leads to wider butterfly implications.)
Side note: I'm doing some economic research from a theory I half invented but likely borrowed parts some from other people (innovation and research is additive) as it relates to Transactional Innovative Cluster Theory. The theory is based on trying to understand the subfactors that lead to macro outcomes in a industry-industry, industry-society/organic or industry-government investments that lead to higher levels of innovation and economic growth. What I was interested in seeing is if COVID pushed the U.S. into a Digital Era (like the Industrial Revolution) where such micro transactions increase in a way that improves advanced innovative economic outputs. In this particular case, whether post COVID US economy will have a new equilibrium that is on a higher growth state for mature economies through innovation and adaptation (i.e. advanced manufacturing and knowledge creation. A type of renaissance in science and technology that leads to wider butterfly implications.)
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