The U.S. economy is forecasted to be growing rapidly, which is causing concern for the Federal Reserve and those hoping for low interest rates.
The U.S. economy has defied previous expectations of slow growth due to factors such as poor productivity and population aging, with growth exceeding projections and averaging 3% under President Joe Biden, but policymakers are still cautious and concerned about the uncertain economic trends, including labor force growth, inflation, and productivity.
U.S. economic growth may be accelerating in the second half of 2023, defying earlier recession forecasts and leading to a repricing of long-term inflation and interest rate assumptions.
UK factory output has fallen sharply to its lowest level in nearly three years, indicating that Bank of England interest rate increases are slowing the economy, according to the latest manufacturing snapshot from the CBI.
UK PMI data suggests a 0.2% decline in GDP in Q3, indicating a potential recession as factory output slumps and the economy faces higher interest rates.
The Swedish economy is expected to experience a downturn over the next two years, with GDP forecasted to shrink in 2023 and 2024 due to low domestic demand and a slowdown in export growth, making it one of the worst-performing economies in the EU; however, there is uncertainty and the possibility of a milder downturn depending on the resilience of the economy. Furthermore, the Swedish krona is expected to continue weakening until mid-2024, and household incomes are projected to fall until 2025, but households are strengthening their financial positions and reducing debt.
Forecasters have decreased their growth expectations for China due to deflation, rising youth unemployment, and a property-market crisis, with GDP predicted to rise by only 5.1% in 2023 and 4.5% in 2024.
China's economy will struggle with low growth under 5% through 2024, leading to a "structural hard landing" due to tight monetary policy, disappointing economic reopening, and challenges in real estate and stock markets, according to TS Lombard strategists.
Consumer spending is driving third-quarter GDP growth, but unsustainable spending habits, tightening lending standards, and the depletion of pandemic savings may lead to a decline in consumer spending in early 2024.
The global economy is expected to slow down due to persistently high inflation, higher interest rates, China's slowing growth, and financial system stresses, according to Moody's Investors Service, although there may be pockets of resilience in markets like India and Indonesia.
British home prices are expected to fall by 4% this year due to high interest rates and living costs, despite the shortage of supply, according to a Reuters poll, with potential buyers being kept out of the property market; however, prices are expected to recover from 2024.
UK inflation has slowed to a 17-month low of 6.8%, prompting expectations of potential interest rate cuts and concerns about the impact on house prices and mortgage rates.
The UK economy recovered from the Covid-19 pandemic faster than previously thought, with revised data showing that UK GDP was actually 0.6% larger by the end of 2021 than in the final quarter of 2019, erasing Britain's laggard status; however, economists caution that this stronger data does not change the overall outlook for Britain's growth or provide relief to households facing high inflation and rising borrowing costs.
Revisions to economic data by the Office for National Statistics (ONS) have revealed that the UK economy was 0.6% larger at the end of 2021 than previously estimated, improving the country's performance relative to its peers in the G7. The revisions also highlight the impact of stockpiling in 2020 and indicate stronger growth in 2021, particularly in sectors such as wholesale trade and health services. However, while the revisions provide a more positive outlook, the UK's economic narrative remains relatively mediocre compared to pre-pandemic levels.
Mortgage rates remain elevated, slowing housing market activity, and while home prices are not likely to fall significantly, rates are projected to decrease in 2023 and 2024.
Consumer spending in the US is expected to decline in early 2024, marking the first quarterly decline since the start of the pandemic, according to a survey by Bloomberg. The pessimism is attributed to high borrowing costs and the depletion of COVID-era savings.
UK gross domestic product (GDP) fell by 0.5% in July, below expectations, with services output being the main drag on the economy, indicating a potential mild recession, and causing investment banks to revise down their growth forecasts; however, some experts still believe that the economy is growing, albeit at a slower pace.
Britain's main manufacturing trade body has lowered its growth forecast for the sector due to a decline in factory output and economic uncertainty, with expectations of a 0.5% fall in output in 2023 and a growth of only 0.5% in 2024.
The Organisation for Economic Cooperation and Development (OECD) has lowered its forecast for global economic growth in 2024 to 2.7%, while predicting inflation to remain above central bank targets despite interest rate hikes; fears of a slowdown in China and reduced growth in the US contribute to the pessimistic outlook.
Inflation in Britain slowed for a third consecutive month in August, defying expectations of a rise due to higher fuel prices, with consumer prices rising 6.7 percent compared to the previous year, driven by slower increases in food prices and a decline in hotel room costs. Core inflation also fell more than anticipated, indicating a potential easing of inflationary pressures, though price growth remains uncomfortably high. The Bank of England is set to announce its decision on interest rates, with growing speculation that rates may be held steady due to signs of slowing inflation and a weak economy.
The forecasted U.S. recession in 2024 is expected to be shorter and less severe than previous recessions, with the economy's interest-rate sensitivity much lower due to reduced leverage and elevated savings from the postpandemic environment, leading investors to consider positioning for investment opportunities that will drive markets into 2024.
The Bank of England has decided to halt interest rate rises due to unexpected inflation slowdown, while housing markets in major global economies, including the US, Germany, and the UK, are showing signs of slowing down. Additionally, there have been developments in various countries' economic outlooks and key interest rates.
The stock market's strong rally in the first half of 2023 has slowed down, with stocks down more than 5% since August despite strong second-quarter earnings and a strong economy, leaving investors unsure of what to expect in the final months of the year.
India is expected to be the fastest-growing major economy this fiscal year, but the forecasted growth is still below potential and risks are skewed to the downside, with a drier than normal monsoon season and sluggish private consumption acting as restraints; however, economists predict that the Reserve Bank of India will cut rates in the second quarter of next year.
Global wealth experienced a significant decline in 2022, with a 2.7% drop in households' financial assets worldwide, primarily driven by falling asset prices; however, there is optimism for a rebound in 2023 and subsequent years, with projected growth of 6%.
German economic institutes are predicting that the country's GDP will contract by 0.6% in 2023, due to rising interest rates and high inflation, causing slower recovery in industry and private consumption.
Despite ongoing concerns about lackluster growth, revised data shows that the UK's economy has grown faster than originally estimated since the start of the COVID-19 pandemic, outperforming France and Germany.
UK house prices are dropping at the fastest rate since 2009, driven by higher mortgage rates and affordability constraints, but buyer demand and consumer confidence are showing signs of improvement. Lowering mortgage rates could be key to revitalizing the housing market, which is expected to end the year with prices 2-3% lower than at the beginning of the year.
China's growth is expected to slow down in 2024, with the World Bank attributing the gloomy outlook to a slowdown in China, weak indicators, stagnant house prices, increased household debt, and trade tensions with the US.
Global economic growth is expected to slightly increase in 2024, but the United Nations warns of a precarious situation and significant economic headwinds that may lead to a slowdown in the U.S. and a potential recession in the eurozone. The UN also highlights the escalating debt distress among frontier economies and calls for more oversight and regulation of food companies in the global trade system.
The US economy is predicted to slow down by mid next year, which will have a negative impact on global GDP, according to Neelkanth Mishra, Chief Economist for Axis Bank. Mishra also mentioned that China will grow slowly but not collapse, while India will be affected through various pathways such as a decline in services growth, goods demand, dumping of products, and financial market volatility. However, he believes that India's trajectory looks good in the next 5-7 years.
Global monetary policy is expected to transition from a period of low interest rates to rate cuts by the beginning of 2024, with only a few central banks anticipated to maintain steady rates, according to Bloomberg Economics. The forecast signals a turning point in the tightening cycle and suggests that the era of ultra-low rates will not return anytime soon. The report also highlights a slower pace of descent compared to the initial rate hikes that led to the higher borrowing costs.
The IMF predicts that the world economy will grow at a slower pace of 2.9% in 2024 due to ongoing risks from higher interest rates, the war in Ukraine, and the eruption of violence in the Middle East, highlighting the need for tight monetary policy to combat inflation.
Russia's economy is predicted to grow by 1.1% in 2024, slower than previously expected, placing it at the bottom of the IMF's list of major emerging markets and developing economies.
Experts predict that mortgage rates will start to trend downward in 2024, although the rate of decrease may not be very fast.
The UK economy's marginal growth in August has led to expectations that interest rates will remain unchanged next month, with analysts describing the figures as lacklustre and warning of the negative impact of higher borrowing costs and the higher cost of living on consumers and businesses. The economy is currently not in recession but concerns over weak growth persist, making it a key issue in the upcoming election.
Economists are predicting that the U.S. economy is less likely to experience a recession in the next year, with the likelihood dropping below 50% for the first time since last year, thanks to factors such as falling inflation, the Federal Reserve halting interest rate hikes, and a strong labor market.
Despite high interest rates and sluggish GDP growth, analysts predict that the UK will avoid a recession due to a likely end to rate increases, falling inflation, and a return to real pay growth.
Economists warn that Britain's economy will grow less than expected next year due to the impact of higher interest rates and a weaker labor market, with GDP growth expected to be 0.7% in 2024. However, EY upgraded its GDP growth forecast for 2023 to 0.6%, citing an end to interest rate increases, falling inflation, and a return to real wage growth as factors that should prevent a recession. Inflation is expected to fall faster than previously forecast, reaching 4.5% by the end of the year before hitting the Bank of England's 2% target in the second half of 2024.
Mortgage rates are expected to decrease significantly by the end of 2024, but a shortage of available homes will lead to higher sales prices for the next few years. Despite the drop in rates, the low inventory of new homes will drive up purchase costs. Additionally, a sluggish economy, rising unemployment, and declining inflation may lead to a recession in early 2024. However, the combination of these factors will eventually help bring down mortgage rates further in the following years.
Economists predict that 2023 will have the slowest home sales year since the 2008 housing bubble burst, with persistently high mortgage rates and low inventory deterring buyers.
The consensus world economic and market view for 2024 suggests weaker growth and a possible U.S. recession, leading to a strong bond rally; however, recent economic indicators from the United States and China point to the possibility of a different outcome with revving up economies and accelerating momentum.
The UK economy is facing uncertainty as policymakers consider the next interest rate decision and Chancellor Jeremy Hunt may further squeeze the economy despite demands for tax cuts, with inflation remaining stable and food prices remaining high, while geopolitical tensions in the Middle East pose a threat to global energy markets.
