Following yet another release of US macroeconomic data that lies outside the range that anyone had predicted, the only certainty is that forecasters' jobs are not getting any easier. But while the global outlook is growing murkier, it has not become inscrutable.
CAMBRIDGE – Once again, US economic and market forecasters are having a difficult time. Worse, while 2023 surprised on the upside, the deviation from projections in 2024 could be much less favorable.
Recall the start of 2023. Forecasters had overwhelmingly anticipated a difficult year for economic growth, and that this would translate into even more losses for the diversified-portfolio investors who had already suffered one of the worst years on record in 2022. In a now famous October 2022 headline, Bloomberg warned: “Forecast for US Recession Within Year Hits 100% in Blow to Biden.”
The prediction of a 2023 recession proved correct, but only for Germany and the United Kingdom, not the United States. The contrast was stunning. While the first two countries experienced two quarters of negative growth in the second half of the year, the US economy grew at an annualized rate of around 4%. Meanwhile, the worrisome investment losses incurred earlier in the year yielded to handsome gains overall, owing to the dramatic turnaround in October for both stocks and bonds.
CAMBRIDGE – Once again, US economic and market forecasters are having a difficult time. Worse, while 2023 surprised on the upside, the deviation from projections in 2024 could be much less favorable.
Recall the start of 2023. Forecasters had overwhelmingly anticipated a difficult year for economic growth, and that this would translate into even more losses for the diversified-portfolio investors who had already suffered one of the worst years on record in 2022. In a now famous October 2022 headline, Bloomberg warned: “Forecast for US Recession Within Year Hits 100% in Blow to Biden.”
The prediction of a 2023 recession proved correct, but only for Germany and the United Kingdom, not the United States. The contrast was stunning. While the first two countries experienced two quarters of negative growth in the second half of the year, the US economy grew at an annualized rate of around 4%. Meanwhile, the worrisome investment losses incurred earlier in the year yielded to handsome gains overall, owing to the dramatic turnaround in October for both stocks and bonds.