Economic factors shaping the soft landing

Dec 09, 2023

Recently, the World Gold Council published, Gold Outlook 2024: Where do we land from here? Report. The report, views US dollar and gold relation in the Outlook 2024 and therefore the report have all eyes on the Fed. Despite some bumps along the way, the global economy proved remarkably resilient in 2023 and talks of an impending recession diminished as the year progressed.

Now, market consensus for 2024 points to a soft landing, given the expectation of positive, albeit subpar, growth ahead. Alongside an economic deceleration, market participants also expect inflation to cool sufficiently for central banks to begin cutting rates. Such a soft-landing scenario would be a welcome outcome for many investors.

But its execution requires razor-sharp precision by policy makers and also relies on many factors outside of their direct control falling into place. Composite PMIs remain in expansion, and manufacturing PMIs are higher than they were mid-2023. Real earnings have been rising for the last six months, resulting in healthy balance sheets.

Household excess savings are not yet depleted and unemployment remains historically low. Fiscal stimulus plans for 2024, should they materialise, will also offer support. Although these factors will not prevent a slowdown in growth, when combined with adequate monetary policy they could help to avert a contraction in the economy.

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