A Review of Our 2024 Predictions

January 27, 2025
Dow: 44,713

Many strategists enjoy making predictions, but a review of past predictions is like a trip to the dentist for a root canal — something to be avoided at all costs. This is a shame because growth and improvement can come from self-examination.

Here goes…

The labor market will remain strong.

-Correct. Although the unemployment rate ended the year at 4.1%, up from 3.8% at the end of 2023, sometimes unemployment increases early in a recovery as more individuals reenter the labor force to look for jobs. Total employment in the U.S. increased by 2.2 million persons in 2024.

Real wage growth will accelerate.

-Correct. Due to the increase in inflation, real wage growth was negative from early 2021 until early 2023. In the second half of 2024 real wage growth accelerated to a rate of over 1% per year.

Household wealth continues to grow at a healthy clip.

-Correct. Household wealth continued to grow due to real wage growth, single digit increases in home values, and strong stock market returns.

Interest rates continue to fall.

-Wrong. Short interest rates fell about 1% in 2024, but longer rates ended the year up about half of a percent. Unfortunately, most consumer and corporate borrowing costs, including home mortgages, are tied to longer rates.

Inflation will be below 2% in 2024.

-Wrong. We were too aggressive here. Consumer inflation did fall from 3.4% in 2023 to 2.9% in 2024. The trend still seems to be for lower inflation going forward, and that is good news for both consumers and investors.

Private credit will be a problem.

-Wrong. There is still a huge appetite for private credit and other alternative investments. More of these types of investments are being packaged and pushed downstream to smaller investors. Those in the food chain that are creating these investment products are making a great deal of money. Let’s hope there are some crumbs left for the end investors, and that they can get out of these investments when they wish.

FOMO (Fear of Missing Out)

-Correct. We said, “There is more room for cash to flow into the market in 2024” and that people will not be satisfied with a 5% return from cash.

You will hear less about Artificial Intelligence.

-Wrong. It is still early in the evolution of AI, and it is impossible to gauge the ultimate effect on society. We are also still in the optimist phase of the investing cycle for AI.

GLP-1 (Obesity drugs) will be the AI of 2024.

-Correct. Like AI, these weight-loss drugs are going to permanently change society in ways we may still be unable to fully comprehend.

The stock market will broaden in 2024.

-Wrong. The largest stocks were again the place to be in 2024. It would be healthier if this trend would begin to reverse itself. Maybe 2025 is the year.

The S&P 500 will gain more than 10% in 2024.

-Correct. This one was an important one to get right. Maybe it should count double.

Either Biden or Trump will not make it to the general election.

-Correct. Wow. For a time last year, there was a chance neither would make the general election. What a roller coaster ride it was.

 

So, overall, seven right, five wrong. We like to think we got the important ones right. As Yogi Berra said, “It’s tough to make predictions, especially about the future.”

 

Random Thought: “The best way to predict the future is to create it.” – Abraham Lincoln

 

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