2024-02-12 23:41:11
ESG/Sustainability/Impact Investment2024.02.13 HEDGE GUIDE Editorial Department Stock Investment Team
On February 5, Natixis Investment Managers, Inc. released a report by portfolio strategist Garrett Melson regarding the US economic outlook for 2024. From 2023, investors’ expectations regarding the economic situation related to the policies of the U.S. Federal Reserve Board (FRB) will change from “the prospect of a hard landing to expectations for a soft landing, which will turn to concerns regarding a no-landing, and a hard landing.” to pessimism” and instability. The consensus forecast is for real GDP growth in the U.S. to remain at 1.3% in 2024, but the company believes it is likely to rise even further, with Melson saying, “In many ways, a soft landing has already been achieved.” “We are beginning to do so,” he said.
The company has been predicting a soft landing for some time, believing that solid growth is compatible with disinflationary pressures.
The rationale is that fiscal constraints, which were a major headwind to growth in 2022, are expected to weaken consistently throughout 2023 and become a moderate support factor in 2024. With bloated inventories largely normalized and consumption holding up, the company sees an inventory replenishment cycle underway that will boost industrial production, particularly the defense and auto/aviation sectors.
The manufacturing industry continues to grow at a steady pace, supported by legislative incentives and the restructuring of supply chains. “We are seeing a broader capex cycle, which we will continue to support, as capex generates more capex and companies look to further invest to improve efficiency, building on their experience in 2021 and 2022.” This is considered to be a contributing factor.
Although federal government spending will be moderate, state and local governments maintain ample cash and are expected to continue spending. Consumer balance sheets are strong, the labor market remains strong, and real wages are rising as inflation declines.
“The labor market is no longer a threat to price stability, and as supply chain frictions are resolved and productivity increases, the real growth rate will continue to be disinflationary, and as inflation subsides, the nominal growth rate will continue to moderately slow.” The company.
“The arrival of a soft landing means a realignment of policy from a restrictive to a neutral one, and a surgical cut in interest rates. Although the timing and size of the cut continue to be debated, “As long as the growth rate does not decline sharply, appetite for risky assets will continue to increase,” he said, predicting the future of the U.S. economy.
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