Reason to remain bullish in 2024 according to Ed Yardeni
SP500 Forecasts:
2024: 5,400
2025: 6,000
Economy Outlook: The economy remains resilient but inflation continues to fall closer to the Fed’s 2.0% target next year
Arguments:
- Fed hasn’t been tightening monetary policy so much as normalizing it to the old normal
- Consumers have purchasing power: unemployment is low now (i.e., below 4.0% since February 2022), and real average hourly earnings is rising once again along its 1.4% annualized trendline that started in 1993
- Households are wealthy and liquid: The net worth of American households totaled a staggering record-high $151.0 trillion at the end of Q3-2023.
- Demand for labor is strong
- Onshoring boom is boosting capital spending
- Housing is all set for recovery due to the recent decline in yields
- Corporate cash flow is at a record high
- Inflation is turning out to be transitory
- The High-Tech Revolution is boosting productivity
- Leading indicators are mostly misleading: There has been a rolling recession in the goods sector, but it has been more than offset by strength in services, nonresidential private and public construction, and high-tech capital spending.
- The rest of the world’s challenges should remain contained
- The Roaring 2020s will broaden the bull market: the bull market was narrowly based, but it since has been broadening to include more sectors and industries