Insights

U.S. to Lead the Charge Again

January 08, 2025

Time to Read: 5 minutes

Since August 2024, U.S. growth forecasts for 2025 have risen 0.4% to 2.1%, while forecasts for the rest of the world remained relatively flat or even declined. These forecasts align with our expectations for the U.S. to continue to outperform its global counterparts in 2025.

We have been overweight U.S. equities for several years and the economic and market fundamentals continue to support this bias. Strong earnings growth supported by improving business sentiment, deregulation, innovation in artificial intelligence and steady consumer spending continue to fuel our optimism.

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Healthy Correction?

After climbing 17% year to date through late October, the S&P 500 declined 5% through November 20. We believe the market was due for a healthy correction. While further downside is possible, it would not concern us.

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The Global Economy Is Holding Up

This past year was rife with risks to the global economy: policy changes, tariff uncertainty and more. Yet, the global economy held up as manufacturing and services activity strengthened across the world.

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Retail Sales Remain Resilient

Considering the slowing job market, we dove into retail sales data to search for signs of the direction of household spending. We analyzed existing-store sales and found that, despite the softening labor market and concerns about growth, aggregate consumer spending remains resilient.

Article | Chart of the Week

Bullish on Fed Easing?

As expected, the Federal Open Market Committee delivered another 25-basis point rate cut. Investors are now focused on the pace of cuts from here. However, the more important driver of future equity returns is whether the Fed is easing into an economy that is growing or not.

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