Strong GDP, Low Inflation Expected In 2024, Fritz Meyer, April 2024

The economy is stronger than expected, so Fed funds will stay higher for longer than the Federal Reserve just projected three months ago, according to the latest quarterly Summary of Economic Projections (SEP). 

Confounding financial economics were the big story of 2023, when the consensus forecasts from Blue-Chip Economics and The Wall Street Journal, as well as the Fed, persistently underestimated U.S. growth and corporate earnings.

The surprisingly strong economy and stock market of that faked out experts in 2023 just positively surprised investors again in the first quarter of 2024. 

The Fed in December expected GDP would grow between 1.2% and 1.7% in 2024. Its latest projection, in the March 20 SEP, is considerably higher, at 2% to 2.4%.

Importantly, however, the Fed does not expect the hotter-than-expected 2024 economy to reignite inflation. Its March 20 PCE Deflator projection was for a 2.3% to 2.7%. In December, the Fed had projected an inflation rate of 2.2% to 2.5%. Raising its PCED inflation projection by just two-tenths of 1% is a mild hike compared to the Fed’s seven-tenths of 1% hike in expected in 2024 GDP growth. The Fed believes the inflation crisis is over. Expect two rate cuts in 2024. 

Objectives of Fritz Meyer's monthly classes for investment advisors include:

● contextualizing current financial economic metrics into the long-term historical record

● providing knowledge to explain your outlook concisely 

● explaining Federal Reserve actions and outlook

● implementing a prudent discipline for fiduciaries managing portfolios ERISA assets

● analyzing the latest financial data, including:

● M2 is down slightly and still very high relative to its history

● FOMC's last meeting and policy pronouncements

● new-job formation 

● job openings still far exceed job seekers

● savings rate plunge

● personal spending 

● consumer income and spending

● DPI and savings

● household balance sheets 

● PCED and CPI

● savings rate

● retail sales

● housing starts 

● latest consensus WSJ Survey

● latest GDPNow forecast 

● Conference Board's LEI capitulation 

● Fed funds/10-year yield curve

● labor participation rate

● 12 month S&P 500 earnings price multiple

● manufacturing and services PMI

● auto sales

● S&P 500 expected, current and historical p/e

● the best approach to investing

This monthly class is eligible for one hour of CE credit towards the CFP^® , CIMA^® and CPWA^® certifications, and PACE credit for the CLU^® and ChFC^® designations.