The latest market outlook from Nuveen forecasts a mild global recession for 2024.
The 2023 Midyear Outlook , authored by members of Nuveen’s Global Investment Committee, estimates a global recession to occur later next year, even after inflation rates have lowered and interest rates remain still. The piece points to rising rates among central banks, along with other factors, for a recession in the U.S.
“…The odds of a global recession can’t be discounted, especially after many central banks have spent the past year resolutely raising rates to battle inflation. In the U.S., many leading indicators have softened [including the ISM manufacturing survey and lending activity], while the Treasury yield curve remains inverted. This points to the likelihood of a U.S. recession of limited magnitude and duration in the medium term,” wrote Nuveen’s committee members in the report.
On a global scale, the report attributes a lack of growth in European markets for a possible recession come 2024. “Outside the U.S., the eurozone economy has already contracted slightly for two consecutive quarters, and the U.K. is also flirting with negative growth. We don’t expect a long or severe global recession, but our base case calls for a mild one emerging in 2024,” committee members added.
While inflationary markets have moderated in 2023 with the Federal Reserve lowering rates to 4%, Nuveen’s report anticipates a temporary disinflation is in the works due to smaller housing market rates and lowered oil prices. “That said, continued progress will be uneven, and we still expect U.S. core inflation to be near 4% at year end — double the Fed’s 2% target,” forecasted Nuveen.
The findings underscore what many in the media, the advisory industry, and investors, have communicated concerns on: a potential market downturn within the next months to a year.
Still, Nuveen’s report references risks for financial professionals and investors to keep an eye out for. Among the downside risks includes a deeper-than-anticipated downturn that could cause central banks to bring back 2022 rate hikes. Financial stress and uncertainty brought on by recent bank failures could also drag out fears and concerns into 2024, added Nuveen.
On the upside, if stronger growth emerges in the market, central banks may nudge interest rates higher from current levels. In this scenario, risk assets should perform well, found the report.
Additional findings from Nuveen’s 2023 midyear outlook can be found here.
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
