Financial experts share their view of the 2024 economy

“What a 180! It’s a whole different ballgame.”

That is how Patti Brennan, president and CEO of Key Financial Inc., characterized January 2024 compared with January 2023 during this week’s Economic Outlook hosted by the Chester County Economic Development Council.

The annual event — this was its 20th year — is the longest-running event of its kind in the region, according to the council. It comes at a time of the New Year when several organizations throughout the region host similar outlook events, with experts offering a view of the year’s economy and their expectations.

Brennan, who is also a CNBC commentator and was named a Hall of Fame Advisor by Dow Jones & Company’s Barron’s, was joined again this year by economic specialist Dianne P. Manges, CFA, director/senior investment adviser for Truist Foundations & Endowments Specialty Practice.

The pair shared their insights on the local, national and global economies on Wednesday with more than 150 business and community leaders at the Economic Outlook held at Penn State Great Valley in East Whiteland Township, Chester County.

‘Markets don’t like uncertainty’

Brennan said there are still some uncertainties in 2024 that may impact the economy, including November’s presidential election, according to a post-event press release.

At last year’s event, Brennan said it would not be a surprise to see a recession in 2023.

“The recession didn’t happen in 2023, but will it happen in 2024? I’m not predicting one,” she said during Wednesday’s presentation. “But the presidential election is creating uncertainty regardless of who wins, and the markets don’t like uncertainty.”

And while Brennan said she doesn’t believe the markets would go down for the year, everyone should be prepared for higher volatility throughout the year.

“If you think you will need money, set it aside,” she said. “That way if the worst happens, it will begin to recover post-election as November and December unfold.”

Manges agreed that uncertainty was the prevailing theme of 2023, and continues as 2024 gets underway.

“While we don’t expect a recession, we do expect a growth rate below the 20-year average — perhaps around 1%,” she said. “Those industries that can benefit from AI and other advances in technology will fare best — and may even thrive — while smaller industries will struggle.

“In 2024, larger companies will also continue to weather the effects of higher interest rates better than smaller industries, which are more impacted by high-interest financing.”

Interest rates

Brennan told attendees that she expects there will be at least one interest rate cut by summer and likely two more cuts in 2024, according to information in the release.

“Mortgage rates will begin to come down in 2024, settling in at 5% to 6%, and that’s when home buying activity will perk up again, probably in 2025,” she said.

Brennan said she anticipates inflation will continue to decrease in 2024, acknowledging the impact of decreased inflation takes much more time to reach the consumer.

“That’s why your groceries continue to be expensive and will continue so in 2024,” she said.

Investment strategy

When it comes to investment strategy, Manges said that in 2022, markets were down double digits and the temptation in 2023 was to say, “I don’t want to go through that again.”

“However, last year a well-balanced portfolio gave double-digit returns,” she said. “Yes, these are outsized numbers, and rolling returns for the last three, five and 20 years show a hardy single-digit return is more reasonable,” she added. “The point is that whether you’re a personal or business investor, my advice is to peel your fingers off the large amounts of cash you’re sitting on because you don’t want to miss out on opportunity.”

Risk, Manges said, is a big part of the discussion when it comes to investment strategies for 2024, according to information in the release.

She said that with the Federal Reserve projecting three rate cuts or 75 basis points — with the markets predicting more — the gap is too big and the risk in that environment can be high.

“With this in mind, for my clients, which are large institutions including nonprofits, our investment strategy is focusing on larger U.S.-based companies as opposed to mid-cap, small-cap or international,” she said. “When it comes to mid-cap and small-cap, over the long term they tend to outperform large-cap, but with it comes more volatility and more risk that I’m not willing to take right now.”

Chester County’s outlook

Brennan said Chester County is “the sweet spot of Pennsylvania — and even nationally — with unemployment lower than national levels and the housing market much more resilient,” according to the release.

“It is truly the land of opportunity so we look not at whether things are good or bad, but whether they’re better or worse,” she said. “In Chester County there’s every reason to think it will get better based on the data.”