Economic Outlook For 2024

Economic Outlook For 2024

©Featured image copyright Bonnie Meisels

 

Economic Outlook For 2024

 

The economic outlook for 2024 as we look ahead to 2024, we have to consider the economic outlook on a global scale, as well as within specific regions such as Canada and the Quebec province. Three key factors that will play a significant role in shaping the economic landscape are interest rates, consumer confidence, and real estate.

Interest rates have a direct impact on borrowing costs and investment decisions. As we move into 2024, it will be crucial to monitor whether central banks opt for tighter or looser monetary policies. The trajectory of interest rates will significantly influence borrowing costs for businesses and individuals alike.

Consumer confidence is another essential factor that can greatly impact economic growth. As consumers feel more optimistic about their financial prospects, they tend to spend more freely. On the other hand, if consumer confidence wanes due to factors such as job insecurity or rising prices, it can lead to reduced spending and slower economic growth.

Real estate is an integral part of any economy, and its performance in 2024 will be closely watched. Factors such as housing demand, supply levels, and government policies will influence real estate prices and market activity. It’s worth monitoring whether there are any significant shifts in these areas that could impact the overall economic outlook.

By keeping an eye on these key indicators – interest rates, consumer confidence, and real estate – we can gain insights into what lies ahead for the global economy as well as specific regions like Canada and Quebec province in 2024.

The global economic outlook for 2024 suggests a period of slowing growth and continued challenges in managing the balance between inflation and economic stability. According to the IMF, global growth is projected to decrease from an estimated 3.5% in 2022 to 3.0% in 2023 and 2024. This downturn is primarily driven by the rise in central bank policy rates aimed at combating inflation, which is expected to decline from 8.7% in 2022 to 5.2% in 2024. However, core inflation is projected to decrease more gradually, indicating ongoing economic pressures​​.

Morgan Stanley’s research echoes this sentiment, expecting global economic expansion to slightly reduce to 2.8% in 2024 and 2.9% in 2025, down from 3% in 2023. This forecast is based on the central banks’ challenge of achieving a ‘soft landing’, where they aim to balance the risks of reigniting inflation and triggering a recession. The approach towards monetary policy is crucial in this respect. If the policy is too lenient, it might fuel inflation, whereas too stringent a policy could lead to a recession. The expectation is that central banks will navigate this delicate balance, leading to subpar growth, especially in developed markets​​.

The geopolitical landscape also plays a significant role in shaping the economic outlook. Geopolitical tensions and uncertainties, particularly related to energy markets and global politics, could impact economic stability.

 

RBC Economic Outlook for 2024

 

  1. U.S. Stock Market and Election Cycles: The U.S. stock market shows a historical pattern aligned with four-year election cycles. It has faced competition from the bond market due to higher interest rates.
  2. Economic Growth: The U.S. is expected to experience a pullback in economic growth in 2024. RBC’s forecast suggests a possible mild recession in the first half of 2024, with a recovery in the latter half.
  3. U.S. Fixed Income: Bonds are anticipated to bounce back in 2024. The starting yields for bonds suggest positive total returns, with an expectation of near 10% returns based on the 10-year Treasury yield forecast.
  4. Canadian Equities and Consumer Spending: Consumer spending in Canada shows signs of softening. There is an observed impact on consumer finances due to restrictive monetary policy.
  5. Canadian Fixed Income: Interest rate risks are becoming more balanced. Following the end of the Bank of Canada’s rate hike cycle, longer-duration bonds are expected to outperform short-duration ones.
  6. Corporate Bond Market: Despite tighter conditions, the extra yield compensation for the risk of default on corporate bonds remains range-bound, suggesting no imminent economic troubles. However, there’s a reduced preference for corporate credit.

 

For more detailed information, you can view the full Global Insight 2024 Outlook for the United States and Canada on the RBC Wealth Management website. View the pdf at the bottom of the page.

 

For the U.S. market, according to an article from Realty Biz News summarizes the Bright MLS 2024 National Housing Market Outlook with the following key points:

 

  1. Improved conditions for homebuyers in 2024, with a slowdown in home price growth, lower mortgage rates, and increased housing options.
  2. Mortgage rates are predicted to drop below 7% in the first quarter, fluctuating between 6-6.5%, and settling at 6.2% by year-end.
  3. A significant increase in home sales is expected, reaching 4.6 million by the year’s end, a 12.1% increase from 2023.
  4. Increased sellers in the market due to evolving family and financial circumstances, leading to a 7.6% rise in inventory.
  5. Median home price in the U.S. to increase by only 1.5% to $394,200.
  6. Affordability challenges will persist, with price declines in certain markets, especially in California and Florida.

For more detailed insights, you can read the full article here.

 

The HousingWire article on the 2024 housing market makes several key predictions:

 

  1. Home sales will pick up in 2024 but will still be below average compared to typical years.
  2. Mortgage rates, which peaked in late 2023, are expected to decrease but will not return to pandemic levels, likely stabilizing between 6% and 6.5%.
  3. Home prices could see modest and short-lived dips in early 2024, especially in less affordable major coastal markets.
  4. Increased home inventory is expected, but supply will remain low due to demographic factors like longer homeowner tenure among boomers.
  5. The market’s future will be influenced by factors like potential new coronavirus strains, geopolitical risks, economic recession, and the 2024 U.S. Presidential election.

For a more detailed analysis, please visit the full article on HousingWire.

 

November Real Estate Market Stats For Montreal 

 

Nov 2023-gs-mtl-ile-en_page-0001November real estate market stats 2023

 

To read the full pdf visit my Montreal Real Estate Market Reports page

 

 

Bright MLS US 2024-Housing_Market-National

 

 

Goldman Sachs Report:

 

 

RBC global-insight-2024-outlook
Goldman Sachs 2024 Report

 

 

RBC Report:

 

 

RBC global-insight-2024-outlook

Bonnie Meisels
buymontrealrealestate@gmail.com
No Comments

Post A Comment