2024 Global Outlook: The Big Picture

Our outlook for 2024 is for a gradual U-shaped recovery composed of seemingly chaotic movements in economic data with turning points in policy rates and earnings growth.

Although we're accustomed to defining investment environments in calendar years, 2024 may not fit that approach very well. We expect that there may be a turning point in policy rates and earnings growth, but they may not be easy to identify in real time. Investors may have to step back a bit to see the bigger picture and look beyond the noise and volatility.

Charles Schwab

A scene in the movie Ferris Bueller's Day Off features Ferris' best friend Cameron focusing more and more closely at a child in one of Seurat's paintings, until he just sees dots and loses perspective. Director John Hughes said of Cameron and the painting, ''the closer he looks at the child, the less he sees,'' as the face disintegrates into a chaotic jumble of pointillist dots. Often the closer we get to something, the more complicated, noisy, and chaotic it seems. Focusing too closely or too near-term on specific developments in the economy, markets, or politics in 2024 can risk missing the bigger picture and broader trend.

The big picture we see for 2024 is of a shallow U-shaped recovery in global economic and earnings growth, rather than the V-shape seen in the last two global recessions of 2008-09 and 2020. If in 2023 the global economy experienced a soft landing with growth for much of the Group of Seven countries (Canada, France, Germany, Italy, Japan, United States, and United Kingdom) stalling but not contracting much, then it's also likely that a soft recovery gets slowly underway during 2024, with growth rebounding only modestly (and unevenly) throughout the year. Global stocks may react with heightened volatility to the seemingly chaotic data points as parts of the global economy move in different directions, with a broader stabilization and recovery only visible over time. Patient investors in global stocks with an eye on the big picture may benefit despite an uneven path higher should markets discount better growth ahead supported by rate cuts among major central banks.