Investment News For The Week Ended Friday, January 26
The financial fake-out of 2023 extended into 2024 and is poised to continue pleasantly surprising investors.
In a week filled with better-than-expected news, Bureau of Economic Analysis inflation data released Friday added weight to evidence that the Federal Reserve’s 12 interest rate hikes between March 2022 and July 2023 quashed a post-pandemic inflation crisis without choking growth and triggering a recession. Defying the Fed’s record for making bad monetary policy decisions and causing every recession in modern U.S. history — except for the short-lived but severe downturn after the Covid-19 outbreak in March 2020, the outlook remains bright.
The economy grew in the fourth quarter of 2023 at a 3.3% annualized rate. That’s double the 1.65% consensus estimate of 60 leading economists surveyed by The Wall Street Journal in early January.
In addition to showing no signs of recession, recent data now make a “soft landing” seem pessimistic. No landing is on the horizon for 2024.
The 60 economists surveyed in January see a slowdown ahead, but no recession.
Disposable personal income (DPI) soared 7.9% in the 12 months ended December 2023. With an inflation rate of less than 3%, consumer purchasing power increased by nearly 5%, according to Friday morning’s data release. Gross domestic product data is subject to revisions at the end of February and March, but America’s consumer-oriented economy is growing at an unexpectedly high rate after adjusting for inflation.
Meanwhile, the Federal Reserve of Atlanta’s real-time algorithmic-driven growth forecast predicts a U.S. growth rate of 3%, much higher than the forecast for .94% GDP in the first quarter of the year predicted by economists in the early-January survey by The Journal.
On Friday, Standard & Poor’s 500 stock index set a new all-time record-high closing price before closing fractionally lower, at 4890.97 on Friday, down -0.07% from Thursday, and up + 1.06% from a week ago. The index is up +118.60% from the March 23, 2020 bear market low.
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