US recession and Trump presidency forecasts on investors’ minds

US economy Global X ETFs American Century recession Donald Trump

8 January 2024
| By Jasmine Siljic |
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A US recession in 2024’s first quarter, alongside a potential Trump presidency by November, are being viewed as likely outcomes in the coming year, according to two investment professionals. 

Rapid interest rate hikes in the US alongside previous inflation spikes are driving the likelihood of a US recession by Q1 of this year, said Charles Tan, American Century Investments co-chief investment officer of global fixed income.

Despite some economists expecting a gradual economic slowdown, Tan described a hard landing by springtime in the US as a much more likely outcome. 

“We think a recession seems more likely. We think a soft landing is a long shot; importantly, the key drivers of prior soft landings for the US economy are absent today. 

“Instead, American Century believes the opposite conditions exist. We believe pressures from the rapid pace of rate rises and the prior spike in inflation along with other factors may trigger a recession by spring in the US,” he explained.

The US Federal Reserve increased interest rates at a record pace of 5.25 percentage points from March 2022 through to July 2023, meaning headline inflation rose from from 1.7 per cent in February 2021 to 9.1 per cent just 16 months later.

Tan continued: “All of this makes recession in the US more likely than a soft landing, which will have deep ramifications for the world’s largest economy, which will also weigh on global economic growth.”

A recession is not the only economic outcome set to impact the US in 2024, with many forecasting a Trump presidency come November time.

David Tuckwell, senior product and investment strategist at Global X ETFs, noted: “The most important thing that will happen next year is the 2024 election in the United States in November, and by all signs it’s going to be Trump versus Biden again.

“What might we see on the back of a pending Trump presidency? Well, it doesn’t bode very well for our planet necessarily based on the signals being sent from the Trump campaign.”

The Inflation Reduction Act and subsidies for renewable energy development could be on the chopping block as a result, meaning solar and wind stocks will feel the sting.

“That’s one area that we might see struggle next year as markets anticipate a Trump presidency. [However], it won’t be all bad news for clean energy and the renewable energy transition should Trump win,” Tuckwell added.

He expects nuclear power, with a particular focus on uranium, to do well if Trump is to be re-elected, evident throughout his presidency previously.

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Submitted by David Cole on Wed, 2023-12-27 13:38

The experts are predicting either a soft landing or no recession at all, the right wingers are praying for a recession, high unemployment and that nut case to become president once again, so they can look forward to deregulation , another round of tax cuts for trust fund babies, and the eventual removal of Social Security retirement benefits for the average American.
God help our United States of America

Submitted by Tonz on Mon, 2024-01-08 12:44

A Trump win is not only good for markets but good for the world. Biden has been an absolute disaster. Further, nuclear is far superior than other clean energy sources. I do expect some pushback from the virtuous ones on this matter.

Submitted by Seti on Fri, 2024-05-24 13:10

The world is increasingly over US imperialism. The country built on mostly forced military global outposts post ww2 , obscenely low income mirgant labor , wars to protect its interests in commodities and strategic interests to maintain control , and the incredible economic and weaponsizing advantages from its dollar replacing the gold standard. It has been a world bully and assumes it is entitled to be so and it is a delight to see the pushback with BRICS and other developments . Its hegemony is immoral and people are seeing through the propoganda. The ridiculous hypocrisy re human rights seen throught its arming and support of horrendous leaders purely for preserving its strategic aims to control the world is becoming obvious to other countries as is the illusory false history of its greatness built on the expense of others. Trump represents the worst of the ugly entitled American. His global politics does not pretend not to be imperialistic at all cost it is openly so. The idea of a multipolar world is horrendous to an unfairly bloated country used to being the richest bully in the globe. Well time to get over that .

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