Navigating 2024: 7 insights from Goldman Sachs economists

I’m Spencer — entrepreneur, angel investor, business leader, co-founder and chairman of Pacaso. I recently had the privilege of attending a meeting with Goldman Sachs economists who shed light on the global economic landscape and market dynamics for 2024. Here are the key takeaways from the meeting that could impact your decision-making process:

1. There are stark economic contrasts between the U.S. and U.K.

While the US GDP forecast for 2024 stands at a robust 2.5%, the UK faces a more modest prediction of 0.6%. The disparities highlight potential opportunities for smart investments on American soil.

2. Don’t count the U.S. economy out.

The U.S. economy outperformed expectations in 2023, growing at 2.4% instead of the projected 1.2%. This unexpected resilience underscores the dynamic nature of the market and the potential for a strong 2024.

3. A recession is likely not on the horizon.

Goldman Sachs forecasts a recession risk of only 15-20% for the U.S. in 2024. Factors like strong labor growth, robust personal consumption and controlled inflation contribute to this confident outlook. Last week’s strong jobs report also provided another data point on our economy’s resilience and current strength.

4. Interest rates should fall, but remain in flux.

Goldman Sachs predicts four 25 bps interest rate cuts by the federal government in 2024, with the first anticipated in March. While this forecast is debated among experts, and might be a bit early, it's a crucial factor to monitor, as it could impact mortgage rates and overall housing affordability.

5. Optimism for the market should be cautious.

Expectations for the S&P 500 in 2024 show a +6% return, considerably lower than the previous year. This is attributed to 7% earnings growth and a 2% multiple contraction. The focus on fundamentals is key for potential investors.

6. Market dynamics are shifting within tech.

The eight largest high-growth tech companies (Meta, Amazon, Google/Alphabet and the like) trade at 28.6x earnings, while the remaining 492 S&P 500 stocks trade at 17.5x. Interestingly, Goldman Sachs is more bullish on the 492 companies, emphasizing a potential shift in market dynamics.

7. The stock market gets juiced during the fourth year.

Historical data reveals a notable trend: in every year four of a president's first term since 1946, the stock market has not only gone up 100% of the time but has also seen an average increase of 12%. This strength is attributed to various theories, including political maneuvers that benefit both the incumbent and the market.As you think about the prospect of a second home investment, staying informed about the ever-evolving economic landscape is paramount. These insights from Goldman Sachs offer valuable perspectives to guide your wealth strategy. Want to learn more? Join me on Feb. 13 for a live webinar with Goldman Sachs industry leaders about capital market, IPO windows, tech stocks and more.