Recession risks cloud Wall Street's outlook for 2024

According to Reuters, investment bankers' and asset managers' outlooks for the United States in 2024 are rife with speculation about a coming recession as the economy gives warning signs of life.

Major forecasters differed widely in their economic predictions for the coming year, with major US banks Goldman Sachs and JP Morgan Chase predicting “limited risk” and “recession risk” respectively, while Deutsche Bank and Société Générale predict a recession in the first half or middle of the year, seconds to Reuters. Economists on average forecast total gross domestic product (GDP) growth of 1.2% in 2024, below the desired 2% and pointing to a possible recession.

“Whether the U.S. has a hard landing or a soft landing will dominate the market,” Sonja Laud, chief investment officer at Legal & General Investment Management, told Reuters. Laud noted that “the narrative is still unclear” and that if there was a change in interest rate forecasts, it would create “significant volatility”.

According to Reuters, investors have increasingly pulled back from trading highly risky options due to concerns about future stock market volatility. Some institutions after the unpredictability are promoting bonds, which are considered a safer asset.

Some financial institutions are not counting on an imminent recession, with Morgan Stanley predicting a continuation of high interest rates from the Federal Reserve as well as increased dollar strength into the new year, according to Reuters. The forecast mix follows skepticism due to recession predictions for this year that have so far failed to materialize.

Some financial institutions are particularly positive about the economy ahead huge GDP growth in the third quarter of 2023, with a total of 5.2% year-on-year, much higher than the 2.1% growth of the previous quarter. Despite the high growth, it is not clear whether it will last, and other indicators, including inflation, have failed to move in a positive direction, measuring 3.2% for the year in October.

The leading non-partisan economic index predict a recession early next year, resulting in GDP growth of just 0.8% for the entire year. The forecast uses a range of economic indicators to assess the future, with factors such as low consumer sentiment, low new business orders and tight credit conditions adding to this negative assessment.

Latest messages from Will Kessler (see everything)

We have zero tolerance for comments that contain violence, racism, profanity, profanity, doxing, or rude behavior. If a comment is spam, instead of replying to it, click the ∨ icon below and to the right of that comment. Thank you for engaging with us in a fruitful conversation.

JOIN OUR NEW COMMENT SYSTEM! We love hearing from our readers and invite you to join us for feedback and good conversation. If you've commented with us before, we'll need you to re-enter your email address for this. The public won't see it and we won't share it.