Thread by @spencerrascoff

1/ Attended a very interesting meeting with Goldman Sachs economists sharing their 2024 outlook.

2/ GDP forecast for US in 2024 is 2.5%. Meanwhile, their GDP forecast for the UK is only 0.6%. Yikes. Sorry UK. 🫤🇬🇧

3/ The US economy in 2023 ended up being much stronger than expected. At beginning of 2023, the forecast for 2023 GDP was 1.2% but GDP ended up growing 2.4%. So double the forecast. 😀🇺🇸

4/ Forecast for 2024 US recession: only 15-20%. Why so low? Labor growth and personal consumption both look good. And inflation seems to be under control.

5/ Rates? GS is forecasting four 25 bps interest rate cuts by the Fed in 2024, first one in March 2024. I know this is controversial. Smart people disagree.

6/ GS forecast for equity market returns in 2024: S&P 500 +6%, much lower than 2023. Market appreciation comes from 7% earnings growth and 2% multiple contraction.

7/ The top eight high-growth tech companies trade at 28.6x earnings but the other 492 stocks in the S&P 500 trade at 17.5x. GS is more bullish on the 492 than the 8 for 2024 equity market returns.

8/ Also, interesting data on how the stock market does in year 4 of a president’s first term. (For those not paying attention, 2024 is a year 4 of a president’s first term.)

9/ 100% of the time since 1946 the stock market goes up, and on average up 12%. This compares with all other years (i.e., all non fourth years of first terms) in which the stock market goes up only 71% of the time and on average 9%.

10/ In other words, the market gets juiced in year 4 of term 1.

11/ Various theories on why the market does well in year 4, including that the incumbent pulls levers to get re-elected and those levers also help the stock market;

12/ and that the market likes stability and year 4 of term 1 usually implies stability because incumbents usually win re-election. END ###