By Antonio Porretta
We’re halfway through 2024—how are your finances holding up? Now is a great time to pause and review the economic trends affecting our market and your financial portfolio. Despite the challenges we faced in 2023, we’ve seen promising signs in key sectors during the first half of this year.
Let’s take a closer look at what’s been happening in our midyear market update to help you prepare for the coming months and plan your next steps.
Markets Are Up
So far in 2024, financial markets have shown steady, positive performance. While the Dow Jones took a dip in May, the S&P 500 extended its bull market gains into the end of the month.
Around the same time, the Federal Reserve unanimously chose to keep policy rates unchanged for the sixth meeting in a row, and rates have remained steady since the beginning of 2024. That being said, strong inflation numbers from the first quarter suggest that hitting the 2% inflation target might take longer than anticipated. What’s more, the U.S. GDP has shown positive but slower-than-expected growth coming out of the first quarter.
This combination of stable interest rates, persistent inflation, and soft GDP growth suggests that the market may see some cautious optimism but also volatility as investors figure out their next moves. How these factors will shape the stock market for the remainder of 2024 is still largely uncertain.
Employment Remains Strong
As of May 2024, the U.S. employment scene shows steady progress with an unemployment rate of 3.9%, which translates to about 6.5 million job seekers. In fact, many leading economists have noted that the labor market remains strong and stable, offering inflation-adjusted pay raises to the average worker. Additionally, real hourly earnings, which are wages adjusted for inflation, grew by 0.5% in April 2024 compared to the previous year.
GDP Is Soft
Despite facing numerous challenges, U.S. consumer spending remained strong throughout 2023. However, this momentum has started to fade. In the first quarter of 2024, the economy posted an annualized GDP growth of 1.3%, which was slightly below the forecasted 1.6%. Additionally, consumer spending grew by 2%, falling short of the anticipated 2.5%.
For 2024, real GDP (GDP adjusted to remove the effects of inflation) is projected to slow to 1.5% in 2024. Looking ahead, real GDP growth is expected to average 2.0% annually from 2024 to 2027—slightly below last year’s prediction of 2.5%.
The Federal Reserve, Interest Rates, and Inflation
The Federal Reserve has raised its key interest rate to the highest level in 16 years to combat high inflation. After a streak of 11 rate hikes between 2022 and July 2023, the Federal Reserve has continued to hit pause for 2024 while reassessing the current economic growth and inflation. Inflation still remains above the Fed’s 2% target, though it remains lower than its peak of 9.1% in 2022. It’s yet to be seen whether interest rates, or inflation, will bounce back higher and hamper the economy for the remainder of 2024.
Global Economies Face Similar Issues
Global growth is projected to continue growing at 3.2% for the remainder of this year and into 2025, the same pace as 2023. The global growth forecast for the five years from now is the lowest we’ve seen in decades, largely due to the tight policies needed to manage inflation, price instability, and continued geopolitical tensions. Inflation is expected to decline to 5.9% in 2024 and 4.5% in 2025. Despite the cautious outlook, the MSCI All Country World Index is up over 7% so far this year.
Stay on Top of Your Finances in 2024
With all that being said, understanding the economic outlook is just the beginning—and facing the rest of 2024 means having a proactive strategy in place.
Think about your future: Are you setting aside enough for your future retirement? How much are you able to safely withdraw from your accounts each year? Are your investments aligned with your financial goals and risk tolerance? We may not control what the Federal Reserve, Congress, or inflation will do, but we can take steps to safeguard our financial futures. The key is in creating a strong and adaptable financial plan.
At Blackbridge Financial, we help clients create a personalized financial plan that helps guide you toward financial success. Our dynamic approach is built to help you take advantage of any market condition. For an introductory meeting, email me at antonio.porretta@lpl.com or call 704.960.9646.
About Antonio
Antonio Porretta is an independent wealth manager at Blackbridge Financial with over 24 years of experience. He specializes in helping people create, distribute, and preserve their wealth. Antonio received an executive MBA from Saunders College of Business at Rochester Institute of Technology in 2007 and also holds the Accredited Asset Management Specialist℠, AAMS® designation. Originally from Rochester, NY, Antonio has been a resident of Harrisburg, NC, since 2007. Outside of work, he enjoys playing soccer and tennis, coaching, and spending time with his wife, Laura, and their children, Cristiano, Victoria, and Matteo. To learn more about Antonio and how he can make a difference in your financial life, visit www.blackbridgefinancial.com.
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Securities are offered through LPL Financial, Member FINRA/SIPC. Blackbridge Financial is an other business name of Independent Advisor Alliance, LLC. All investment advice is offered through Independent Advisor Alliance, LLC, a registered investment adviser. Independent Advisor Alliance, LLC is a separate entity from LPL Financial.
This material was prepared for Antonio Porretta’s use.