2024 Midyear Outlook Presentation

Expanding on our initial 2024 Outlook, “A Turning Point,” this midyear update offers fresh insights into the economic and market landscape, along with their potential impact on investment portfolios.

VIEW THE WHOLE OUTLOOK PRESENTATION HERE

THE ECONOMY: A TALE OF PROLONGED RESILIENCE, BUT A DELAYED LANDING ON THE HORIZON

Economic growth has continued to surprise on the upside, and a definitive slowdown has proven elusive despite the late-cycle characteristics. This economic resilience can largely be attributed to the following: § Surprising Spending Strength: Consumers, particularly wealthier ones, surprised us with their continued spending power despite high prices. § Varying Degrees of Interest Rate Sensitivity Across the Economy: The refinancing boom experienced during the COVID-19 pandemic has boosted disposable income and further amplified the economy’s resilience. Despite initial buoyancy, economic data has begun to show signs of deterioration, leading us to anticipate an economic downshift starting in the latter half of 2024. Investors should be prepared for: § Slower Consumer Spending: Consumers are shifting away from bigticket purchases, likely leading to broader spending slowdowns. § Softer Labor Market: Recent data indicates labor demand is weakening. The unemployment rate, though historically low, is expected to rise in the last two quarters of the year. § A Measured Slowdown: As consumer spending and labor demand slow, a moderate economic slowdown should follow. § Contained Inflation: Core services inflation is expected to cool as labor costs decelerate, but the overall impact on consumer prices will take time. § Shifting Federal Reserve Policy: A higher unemployment rate, weaker growth, and contained inflation will eventually provide the Federal Reserve (Fed) with a path to cut rates before the end of the year.