Fed's "foe" status could flip to "friend" if recession materializes in 2024
2024 market outlook explores wide-ranging economic and inflationary forces – and the potential impacts for markets, financial advisors and investors
LOS ANGELES, Dec. 13, 2023 /PRNewswire/ -- Cetera Financial Group (Cetera), the premier financial advisor Wealth Hub, announced today it has published its 2024 Annual Market Outlook: The Fed: From Foe to Friend. The annual market commentary, developed by Cetera Investment Management, reflects on 2023 and examines wide-ranging economic and market forces and implications in 2024, including economic growth, inflation expectations, and the potential impact of the Fed's monetary policy. While the Fed has been a headwind for the economy for some time, it could switch from foe to friend if a recession materializes in 2024, according to the outlook.
Additional key takeaways from the 2024 Annual Outlook include:
- The U.S. economy has been resilient in 2023, defying a widely expected recession. As it turns out, the economy exceeded expectations for almost the entire year, as first and second quarter gross domestic product (GDP) growth topped 2%, and the third quarter well exceeded the first two quarters with growth just north of 5%.
- Economic growth at the start of 2024 is likely to be weak, so the possibility of a recession is still elevated. Some leading economic indicators are pointing toward weakness, while other factors, such as the resumption of student loan payments and a high federal budget deficit making more stimulus unlikely, could contribute to a 2024 recession.
- Inflationary expectations in 2024 are encouraging, with many forecasts – including the Fed's – in the 2.5% range, meaning the Fed could get comfortable enough to cut rates even if a recession does not occur. If the Fed cuts rates more than expected, it could serve as a tailwind to both stocks and bonds. Ultimately, the Fed was tougher than many anticipated in 2023, but it appears it has stopped raising interest rates and cuts are possible in 2024.
- Market volatility eased in 2023 yet could be elevated in 2024 – especially if the Fed is reluctant to cut rates in the face of weak growth or falling inflation. Volatility could favor bonds and equity asset classes that have been out of favor in recent years, such as small-caps and value.
- Earnings growth is expected to be better in 2024. Performance broadening beyond growth sectors should help support equity markets.
- Increased geopolitical risks in Europe, Asia and the Middle East – combined with a presidential election year – may generate more negative headlines for investors to digest.
Click here to read the entire 2024 Annual Outlook: The Fed: From Foe to Friend.
About Cetera Financial Group®
Cetera Financial Group (Cetera) is the premier financial advisor Wealth Hub where financial advisors and institutions optimize their control and value creation. Breaking away from a commoditized and homogenous IBD model, Cetera offers financial professionals and institutions the latest solutions, support, and services to grow, scale, or transition with a merger, sale, investment, or succession plan. Cetera proudly serves independent financial advisors, tax professionals, licensed administrators, large enterprises, as well as institutions, such as banks and credit unions, providing an established and repeatable blueprint for scalable growth.
Home to more than 9,000 financial professionals and their teams, Cetera oversees approximately $374 billion in assets under administration and $145 billion in assets under management, as of September 25, 2023. In a recent advisor satisfaction survey of more than 21,000 reviews, Cetera's Voice of Customer (VoC) program vigorously measures advisor experience and satisfaction 24/7. Currently, it's ranked 4.8 out of 5 stars.
"Cetera Financial Group" refers to the network of independent retail firms encompassing, among others, Cetera Advisors LLC, Cetera Advisor Networks LLC, Cetera Investment Services LLC (marketed as Cetera Financial Institutions or Cetera Investors), and Cetera Financial Specialists LLC. All firms are FINRA/SIPC members. Located at: 655 W. Broadway, 11th Floor, San Diego, CA 92101.
Individuals affiliated with Cetera firms are either Registered Representatives who offer only brokerage services and receive transaction-based compensation (commissions), Investment Adviser Representatives who offer only investment advisory services and receive fees based on assets, or both Registered Representatives and Investment Adviser Representatives, who can offer both types of services.
SOURCE Cetera Financial Group