Could 2024 Be the Year of a Goldilocks Economy?
By Erik Norland
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So, the inflation front is improving.  However, the economic growth front may be looking shaky.  5.25% of Fed rate hikes, along with similar rate hikes from most of the world’s other central banks, could take its toll on economic growth in 2024. If the economy falls into a recession, that could be bad news for stocks. The S&P 500 lost 50% of its value during the 2001 recession and 60% of its value during the global financial crisis even as inflation rates remained low.  

Core inflation

Additionally, stocks were cheap in the early 1990s and the early 2010s when the S&P 500’s market cap was worth about 50% of annual U.S. GDP.  Now the S&P 500 is trading at close to 160% of U.S. GDP.  As such, even if it returned to a goldilocks economy, it’s not obvious that stocks would perform exceptionally well.

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About the author

Erik Norland
Erik Norland, Executive Director & Chief Economist, CME Group

is responsible for generating economic analysis on global financial markets by identifying emerging trends, evaluating economic factors and forecasting their potential impact on CME Group's various asset classes, ranging from interest rate products to energy and agriculture. He is also one of CME Group’s spokespeople on global economic, financial and geopolitical developments.

 

 

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