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Market and Economic Outlook 2024

Market and Economic Outlook 2024

December 07, 2023

December 2023

2024 Market and Economic Outlook

As we approach the end of 2023, our attention shifts to 2024 and what it may bring for the economy and financial markets. Over the past 12 months, we’ve certainly been through a lot including inflation struggles, geopolitical conflicts, government spending issues, and rising interest rates. Despite these factors, the US stock market is up approximately 18% year-to-date (as measured by S&P 500 total return at the time of this writing). In this report, we plan to share our market outlook for 2024, our thoughts on the economy, our interest rate outlook and finally 3 financial planning concepts we think are important to consider. We hope you find the following information informative and insightful.

Where will the S&P 500 stock market index finish in 2024?

One of the most common questions we are asked is “Where is the market headed in the next 12 months?” While answering this question accurately is impossible, we have completed a range-bound target for the S&P 500 based upon earnings growth and a price to earnings multiple. Please keep in mind that we do not believe predicting short or intermediate market outcomes is possible. We do believe in the strength of corporate earnings and the idea that earnings drive market gains and losses over time.

In corporate finance, earnings are equivalent to a company’s net income, or profits. It’s the amount of money the company has after its expenses, taxes, and accounting additions/subtractions. It has its limitations but generally earnings are a good indication of how profitable a business is in any given year. Heading into 2023, many economists and industry experts predicted a recession. Despite this, earnings growth in 2023 was generally flat year-over-year. We were impressed with companies’ resilience and ability to maintain their earnings despite these forecasts. We’re optimistic that 2024 will continue the trend of corporate America prevailing in difficult conditions (like higher interest rates). We’re forecasting S&P 500 earnings growth of 8% in 2024 and of 8% in 2025.

The other part of our S&P 500 calculation deals with a market price to earnings multiple.  Historically this has been around 16-19x. This market multiple can be viewed as a sentiment indicator. Typically when investor sentiment is negative, the multiple is low. In March 2020 the multiple declined to 13.1x. When investor sentiment is more positive, the multiple trends higher. In January 2022, the last time the S&P 500 hit an all-time high, the market multiple was 21.4x. For the purpose of this exercise, we will use 19x.

We can now calculate our S&P 500 price target at the end of 2024. Assuming 8% earnings growth in 2024 and 2025, and a PE multiple of 19x, this equates to a S&P 500 price of 4833 at the end of 2024. Taken a step further, a range between 4600 and 5000 at the end of 2024 may be possible. Please keep in mind that this is merely an exercise based upon several assumptions. This is not to be taken as a prediction, merely a thought exercise. See Appendix A for details on this calculation.

Will economic growth continue into 2024?

Over the past year, US GDP growth has been positive. GDP, or Gross Domestic Product, measures the size and productivity of an economy. A large portion of the GDP is made up of consumer spending (approximately 70%).  As previously mentioned, many experts were predicting a recession in 2023. This has not been the case. Looking at Exhibit A below, growth over the past 4 quarters has been positive, with an especially strong reading in September 2023.

Exhibit A

It is difficult to predict economic growth. We generally rely on various research providers to help us understand economic forecasts. Below is Morningstar’s economic growth forecast along with the consensus opinion.


Exhibit B

This shows economic growth slowing in 2024 and then rebounding in 2025. There are several headwinds facing the US and Global economy, including sticky inflation, high interest rates and geopolitical uncertainty. This should cause the economy to slow down from its current rate. Hopefully this will lead to a soft landing (not a major recession) where interest rates come down and asset prices go up.

When will the Fed cut interest rates?

Predicting interest rates moves is incredibly difficult (we’d argue impossible to do consistently). Even officials at the Federal Reserve have difficulty predicting how interest rates will evolve (e.g. the inaccuracy of the Fed dot plot). Many experts believe that the Fed was late to combat inflation. It seems that we are near the end of this rate hiking cycle. With the current Federal funds rate at 5.25-5.5%%, we are in restrictive territory. In other words, the cost of capital exceeds the normal rate in the economy in order to encourage economic growth. The good news is that the economy has generally surprised to the upside this year. For interest rates to be lowered, the Fed needs to believe that the battle against inflation is complete. Ideally, interest rates will start to come down slowly and we enter a slow growth economy. Similar to the 2010’s, this would encourage the Fed to lower rates in order to keep the economy growing albeit at a pace that wasn’t inflationary. For interest rates to come down quickly, we would likely need to experience an economic shock. While these events happen from time to time, they are typically unpleasant and associated with falling asset prices and rising unemployment. Below is a chart from Morningstar showing their inflation expectations along with the consensus view among economists.

Exhibit C

3 Financial Planning Ideas for 2024

Looking into 2024, there are many facets of financial planning that will be a focus. January is a great time to review the 50/30/20 rule of budgeting. It is a technique that involves dividing your after-tax or take home income into three sections: needs, wants, and savings. It is a straightforward approach that can make budgeting and cash flow planning easier. While your essential expenses may be difficult to reduce, there may be opportunities to change your discretionary spending.

The 50/30/20 budgeting rule can help people build an emergency fund, save for retirement, and pay off debt. There are many ways to budget and many tools available online.  Utilizing budgeting software, an excel worksheet, or talking to a financial planner are all good starting points.

Exhibit D

Now that federal student loan payments have started back up, there are many repayment plans you can consider:


  • Standard Repayment lasts 10 years and tends to cost the least amount in interest. This is typically the plan that students are auto-enrolled in when they graduate.
  • Income-Driven Repayment options allow you to pay back your loans up to 20 or 25 years in proportion to your income, and once the term is over, you could qualify for income-driven loan forgiveness.
  • Graduated Repayment lowers your monthly payment initially and then increases the amount every 2 years for 10 years.
  • Extended Repayment starts low as well and will increase every 2 years for a total of 25 years, or you can split the payments evenly over the 25 years.

The Education Department has a Loan Simulator that is helpful if you are struggling to pay your loan payments, or if you are interested in changing your repayment plan. Creating a plan with a financial planner can help get more clarity on which plan may be best for your situation.


529 plans will get a facelift in 2024, with new legislation allowing individuals who have funds remaining in their 529 plans to transfer it into a Roth IRA for the benefit of the beneficiary. The current limits will be a total of $35,000 of eligible rollover, not to exceed the annual Roth IRA contribution limit each year ($7,000 total for 2024). As 529 plans continue to evolve, the main attractions remain the same; the account growth is tax free if used for education costs, you can change the beneficiary of the plan to other eligible family members, and a 529 plan will never expire allowing you to leave an education legacy.


Should you need to withdraw money from a 529 plan, it may not cost you as much in taxes as you might think. The withdrawal amount will be taxed at the beneficiary’s rate, which is likely to be lower if it is your child. You would pay a 10 percent penalty, but it’s just on earnings growth. There are even a few situations where you may not incur a penalty at all. If the beneficiary dies, becomes disabled, or goes to a U.S. military academy, no penalty would apply. Should the beneficiary get a scholarship, you can withdraw up to the amount of the award and spend it on anything you want, but you’ll pay income tax on any gains in the account when you make withdrawals.  

Concluding Thoughts                                                                                                              

This 2024 Market and Economic Outlook has covered a number of financial topics, but barely scratched the surface of items that could be addressed. 2024 may not be a year that has huge growth projections, but given the better than expected economic outcomes in 2023, there are many reasons to be optimistic. One thing that is easier to calculate is your own 50/30/20. Take some time in the near future to see if your after-tax income is allocated proportionately to this rule’s guidelines. Some might also be surprised to find that looking into student debt repayment plans could help facilitate cash flow each month. Lastly, a 529 plan could be a great avenue to save for education costs even at the high school level. These education savings accounts are not for everyone, but come with some great perks that warrant a discussion, especially with the new laws about rolling left over funds to a Roth IRA starting in 2024.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.



Appendix A






EPS Y/Y Growth 2025



































S&P Multiple




































Morningstar (2023). US Market Outlook: Q3 2023. ‘Time to Batten Down the Hatches? Or Raise the Sail?’. Powerpoint slides from webinar.