“Listen to advice and accept discipline, and at the end you will be counted among the wise.” — Proverbs 19:20
We’ve reached the midway point of 2024—have you taken a moment to see how your financial journey is progressing? If not, now is the perfect time to take a breather and assess the economic trends shaping both our market and your financial portfolio. Despite the hurdles of 2023, we’ve observed encouraging developments in key sectors during the first half of this year.
In the following article, we offer an in-depth exploration of our midyear market update, where we delve into the latest developments and assist you in gearing up for the months ahead. Read on to plan your next moves.
Markets Are Up
So far in 2024, financial markets have shown steady, positive performance. While the Dow Jones took a dip in May, the S&P 500 extended its bull market gains into the end of the month.
Around the same time, the Federal Reserve unanimously chose to keep policy rates unchanged for the sixth meeting in a row, and rates have remained steady since the beginning of 2024. That being said, strong inflation numbers from the first quarter suggest that hitting the 2% inflation target might take longer than anticipated. What’s more, the U.S. GDP has shown positive but slower-than-expected growth coming out of the first quarter.
This combination of stable interest rates, persistent inflation, and soft GDP growth suggests that the market may see some cautious optimism but also volatility as investors figure out their next moves. How these factors will shape the stock market for the remainder of 2024 is still largely uncertain.
Employment Remains Strong
As of May 2024, the U.S. employment scene shows steady progress with an unemployment rate of 3.9%, which translates to about 6.5 million job seekers. In fact, many leading economists have noted that the labor market remains strong and stable, offering inflation-adjusted pay raises to the average worker. Additionally, real hourly earnings, which are wages adjusted for inflation, grew by 0.5% in April 2024 compared to the previous year.
GDP Is Soft
Despite facing numerous challenges, U.S. consumer spending remained strong throughout 2023. However, this momentum has started to fade. In the first quarter of 2024, the economy posted an annualized GDP growth of 1.3%, which was slightly below the forecasted 1.6%. Additionally, consumer spending grew by 2%, falling short of the anticipated 2.5%.
For 2024, real GDP (GDP adjusted to remove the effects of inflation) is projected to slow to 1.5% in 2024. Looking ahead, real GDP growth is expected to average 2.0% annually from 2024 to 2027—slightly below last year’s prediction of 2.5%.
The Federal Reserve, Interest Rates, and Inflation
The Federal Reserve has raised its key interest rate to the highest level in 16 years to combat high inflation. After a streak of 11 rate hikes between 2022 and July 2023, the Federal Reserve has continued to hit pause for 2024 while reassessing the current economic growth and inflation. Inflation still remains above the Fed’s 2% target, though it remains lower than its peak of 9.1% in 2022. It’s yet to be seen whether interest rates, or inflation, will bounce back higher and hamper the economy for the remainder of 2024.
Global Economies Face Similar Issues
Global growth is projected to continue growing at 3.2% for the remainder of this year and into 2025, the same pace as 2023. The global growth forecast for the five years from now is the lowest we’ve seen in decades, largely due to the tight policies needed to manage inflation, price instability, and continued geopolitical tensions. Inflation is expected to decline to 5.9% in 2024 and 4.5% in 2025. Despite the cautious outlook, the MSCI All Country World Index is up over 7% so far this year.
Stay Ahead of the Curve
Now that we’ve shared our market update, let’s talk strategy! Understanding the economic outlook is just the start—it’s crucial to have a proactive plan for the rest of 2024.
Consider your future: Are you saving enough for retirement? How much can you withdraw safely from your accounts each year? Do your investments match your financial goals and risk tolerance? While we can’t control what the Federal Reserve, Congress, or inflation will do, we can take steps to shield our financial futures. The key is crafting a robust and flexible financial plan.
At EagleFlight Wealth Management, we create personalized financial plans to steer you toward success. Our unique approach is designed to help you thrive in any market condition. To get in touch to schedule an introductory meeting, call (765) 288-1927 or email barry.hickey@cfdinvestments.com.
About Barry
Barry Hickey is the founder, managing partner, and financial advisor at EagleFlight Wealth Management, a financial services firm based in Muncie, Indiana, helping people live and retire with dignity and financial peace by planning their financial future with a biblical worldview. Barry has been in the financial services field since the mid-1980s. In 2006, inspired by Isaiah 40:31 (“They that wait upon the Lord shall renew their strength; they shall mount up with wings as eagles; they shall run, and not be weary.”), Barry became an independent financial advisor and founded EagleFlight with the mission to help people plan for their financial future and find financial peace, and to fulfill the mission God gave him.
Born and raised in Muncie, Barry graduated from Muncie Southside and served in the Marine Corps during the Vietnam War. He holds a Series 6, 7, 63, and 66 securities licenses and the Indiana Life and Health Insurance License. He also holds the Accredited Asset Management Specialist℠, Chartered Retirement Planning Counselor℠, Certified Kingdom Advisor®, and Retirement Income Certified Professional® designations.
Outside of work, Barry enjoys reading, watching football and baseball, and spending time with his wife (Carla), children (Kristin, Ryan, and Lauren), and grandchildren (Emmi, Cate, Ben, Maddie, Sophia, Bella, and Brady). His favorite Scripture is Matthew 6:33, “But seek first his kingdom and his righteousness, and all these things will be given to you as well.” To learn more about Barry, connect with him on LinkedIn.
Barry Hickey offers Advisory Services through Creative Financial Designs, Inc., a Registered Investment Adviser. Barry Hickey and Ryan Hickey offer Securities through CFD Investments, Inc., a Registered Broker/Dealer, Member FINRA & SIPC, 2704 S. Goyer Rd., Kokomo, IN 46902. 765-453-9600.