Cooling inflation, the potential for the Federal Reserve to avoid further interest rate hikes and the optimistic outlook for the stock market and the economy for the remainder of 2023 into 2024 could have positive implications for job seekers.
A positive stock market and economic outlook can lead to increased business confidence and investment, potentially resulting in job market expansion. Employers may be more inclined to hire and invest in talent as economic conditions improve. As the economy and stock market improve, growth can create opportunities for job seekers, as companies may seek to expand their workforce and invest in innovation to meet growing demand and capitalize on market opportunities. This could lead to a more favorable environment for job seekers, with increased job openings and potential for career advancement.
A strong economy and job market can lead to increased wage growth and improved benefits for employees. As companies compete for talent in a growing economy, they offer more competitive compensation packages and benefits to attract and retain skilled workers.
Why Things Changed
The economy saw a swift change predicted to increase the likelihood of a strong job market from now into next year. The brighter outlook was due to the decrease in the Consumer Price Index (CPI) and a significant boost to the stock and bond markets. The decline in the CPI and the potential for inflation stabilization led to investors’ optimism. The Federal Reserve’s approach to interest rates and inflation has been a critical factor in market movements. If inflation remains at current levels or decreases, the Fed may be able to leave interest rates unchanged, which is viewed positively by the market.
Top-tier investment banks Goldman Sachs and Morgan Stanley forecasted that the United States economy will improve into 2024. In a Wednesday note to clients, Goldman Sachs said, “We forecast the S&P 500 index will end 2024 at 4700, representing a 12-month price gain of 5% and a total return of 6% including dividends.” The bank added, “Our baseline assumption during the next year is the U.S. economy continues to expand at a modest pace and avoids a recession, earnings rise by 5%, and the valuation of the equity market equals 18x, close to the current [price-to-earnings] level.”
Morgan Stanley said on Monday that it expects the S&P 500 to end 2024 at 4,500 and predicted earnings recovery through the year. The target represents a 2% upside from current levels.
Despite concerns about a potential recession, economic indicators such as GDP and employment have shown resilience, leading to a more optimistic outlook for the stock market and the economy.