2024 US Economic Outlook: Investment Strategies for a 'Soft Landing' Scenario

In 2024, the U.S. economy is seen growing a moderate pace, while the Federal Reserve is seen embarking on an interest rate cutting cycle. We consider what this will mean for stocks, currencies, and bonds.

In 2023, there were still some global reopening efforts occurring at the beginning of the year, while travel and tourism was still returning to its pre-pandemic levels. Following the U.S. banking crisis in early March, the Fed established a path of slowing down interest rate hikes, coupled with liquidity injections through the Bank Term Funding Program (BTFP). As a result, the U.S. economy was somewhat insulated from a ‘hard landing’ scenario and instead grew much stronger than anyone had anticipated, driving the S&P 500 and NASDAQ to respective gains of over 16% and 30%.

Looking ahead to the first half of 2024, economic growth is expected to calmly transition from strength to moderation. This not only provides a somewhat supportive backdrop for the economy but also increases the likelihood of the Fed pulling the trigger on preemptive rate cuts, aligning with the favorable economic scenario we mentioned for stocks and bonds. However, as we progress into the latter half of 2024, challenges to economic prospects still linger and with the presidential election set to steal the headlines, there is potential for market volatility as investors wager their bets on Trump vs. Biden. We will provide a comprehensive analysis of the three major focal points for 2024: the economy, monetary policy, and the U.S. stock, currency, and bond markets in this article.

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