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Sound money is the result when interest rates are above the rate of inflation, a development that is expected to persist in the years ahead. In the meantime, the transition to a higher interest rate environment has no doubt challenged investors, who have endured historical losses in bonds and high volatility in stocks. But make no mistake: This structural shift is the single best economic and financial development in the last 20 years. Looking forward and as shown in this report, investors will benefit from a return to sound money.

Several years on from the pandemic, the global economy is still wrestling with the repercussions. While investors will hope for the best in 2024, macro analyst Richard de Chazal examines the resiliency of the markets against a crowded backdrop of Fed policy uncertainty, inflation, bond market and economic dynamics, and other factors each of which will test the limits of the market’s endurance.

The tech industry has been undergoing a difficult period. Economic instability, high inflation, and rising interest rates have prompted tech companies to reevaluate their business strategies, adjust their growth plans, and revisit their staffing models. At the same time, there have been remarkable advancements with generative artificial intelligence (AI) taking center stage and ushering a new era of technology. This acerating pace of tech innovation continues to introduce new business opportunities across industries.

The global economy faced a high degree of difficulty in 2023, but it earned high marks with continued growth, labor markets remaining strong, and declining inflation amid the ongoing expansion. The soft-landing narrative has considerable allure, but the three-year-old expansion is vulnerable. Higher interest rates are exacting an increasing toll, and the cycle has been challenged by an unsettling series of unfortunate events. In this special report, the Northern Trust Economics team shares its outlook for growth, inflation, employment, and interest rates in the year ahead.

Investors have been looking for a recession amidst rising interest rates and expectations for slowing growth, but continued growth in much of the economy and resilient investment performance in 2023 has made for a very murky economic puzzle going forward. Exogenous factors such as geopolitical instability, deglobalization, and continuing risk of a U.S. government shutdown add complicating risk factors to the economic outlook.