2024 Market Outlook

Looking back at my previous articles will give you contextual data relative to where we are today as l reference their relevance in this article. While some economists think we are moving in the right direction after mitigating a deep recession, others are still uncertain. This article highlights key economic drivers heading into 2024.

Real Estate – Referencing my earlier GEARS articles in June and July of 2022, you’ll see the tipping point of the real estate market and its downward trajectory. For example, the June article titled Unprecedented US Real Estate Market Trends explained how the housing market was out of control, trending between 18 to 20 percent year over year.

Today, according to the Forbes article, Median Home Prices by State 2023, the Q4 Real Estate market grew 2% year over year, with the Median home price of $412,100. This market shift was due to the increase in interest rates. With home prices stabilizing, it is a suitable time to purchase real estate if you have the cash to make a higher down payment.

Interest Rates – Some investors might say, “I want to wait until interest rates come down to invest in Real Estate.” Well, isn’t that what you might have said about housing prices? Unfortunately, it doesn’t seem you can have both low interest rates and housing prices since they are inversely related. Nonetheless, interest rates are expected to remain stable going into 2024. Furthermore, the Fed Funds rate is currently targeted at 5.25% to 5.5% and might fall by 1% in 2024 (www.forbes.com/advisor/investing/ fed-outlook-2024/).

Inflation – According to Forbes’s forecast, inflation has dropped significantly because of rate hikes. Thus, some economists caution against lowering interest rates too much in 2024 due to the risk of losing ground on managing inflation. Therefore, the PCE (Personal Consumption Expenditures price Index) is expected to drop from 3.2% in 2023 to 2.2% in 2024 (www.forbes.com/advisor/investing/ inflation-outlook-2024/). The Forbes article cited offers inflation forecasts for several distinct categories, such as food, energy, and wages. It is worth the read.

Bonds – Referencing GEARS April article, Silicon Valley Bank Postmortem, earlier in 2023, we saw bond prices nosedive along with the demise of Silicon Valley Bank with its overexposure in long term bonds and its need for immediate operating cash. However, a lot has changed since then. According to Morningstar, long-term duration bonds are in fashion again, driven by an expected decline in interest rates (Where to Invest in Bonds in 2024 | Morningstar).

Equities – The S&P had a phenomenal year with a YTD return of 26.6 percent, and investors who stayed invested were rewarded. Conversely, according to Marko Kolanovic, Chief Global Markets Strategist for JPMorgan, “As we approach 2024, we expect both inflation data and economic demand to soften, as the tailwinds for growth and risk markets are fading. Overall, we are cautious about the performance of risky assets and the broader macro-outlook over the next 12 months due to building monetary headwinds, geopolitical risks, and expensive asset valuations (Market Outlook 2024 | J.P. Morgan Research (jpmorgan.com).”

The underlying theme going into 2024 is caution. As market indicators shift, it is important to know that diversification is key. Do not fall in love with any singular asset class or industry. Reach out to your financial advisor for further guidance. Finally, I wish you a prosperous 2024. Happy New Year!

If you already have an investment advisor, congratulations. However, if you’d like to learn more about what investment advisors do for their clients, please contact me at empiriKalpartners.com for an individual assessment.