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Q1 2024 Outlook

January 2024

Issue #1


Buckle up for an invigorating election season. 



Growth Slowing 

At the very least, we expect growth to stagnate in 2024.



Can the government keep up the hiring? 



General election years are traditionally good for the market.


Growth Slowing 

Europe has been struggling for over 6 months, but their stocks have proven resilient. This is a very important lesson in investing. THE STOCK MARKET IS NOT THE ECONOMY.

For the record, we predicted a recession in 2023, and that sure as heck didn’t happen. I’d like to say government spending accounted for 30% of GDP growth (as opposed to the historical rate of 17%) and drove the economy, but we’ll never know for sure 😉.

The US economy looked strong on the surface last year, but GDP growth into Q4 was accompanied by a rapid expansion of the budget deficit. This record shattering government spending was far beyond our expectations for the calendar year.

The general consensus amongst economists suggests that the US economy is going to continue to grow at a healthy rate in 2024. For better or worse, our prediction is growth turning negative by Q2 and turning positive again in Q4. In the absence of additional stimulus, growth will likely be flat for the calendar year. Stocks don’t generally like zero growth which makes a repeat of 2023 highly improbable.


Historically speaking, presidential election years have provided solid returns on average. This is potentially good news considering our base case of slowing growth and employment deterioration.

Since 1928, the S&P 500 has gained roughly 7.5% annually in presidential election years. As noted in the graph above, the ride isn’t generally smooth. On average, there is fairly significant volatility at the beginning of election years and also again in the period leading up to voting day.

For what it’s worth, when a Democrat is reelected, the total return averages 11.0%. When a Republican replaces a Democrat, the average return climbs to 12.9%.


The unemployment rate closed out 2023 at 3.7%. This was an improvement from 3.9% the previous month. Government employment increased by 52,000 in December. The government added an average of 56,000 jobs per month in 2023, more than double the average monthly gain of 23,000 in 2022. In total, Payroll employment rose by 2.7 million in 2023 (an average monthly gain of 225,000), less than the increase of 4.8 million in 2022 (an average monthly gain of 399,000).

I’m not a mathematician, but it would seem as though the government saved the day here as well. Our concern lies in the fact the government has mostly run out of prefunded stimulus, save for the remaining dollars in the “Inflation Reduction Act”.

We firmly expect the unemployment rate to tick above 4% in Q1 of 2024. With job openings dwindling and challenging comps for publicly traded companies, it would not be surprising to see significant layoffs in the months ahead.

The Bottom Line

Mr. Market can be a fickle fella. Most of the time the market is predictive of future economic growth - except for when investors are overly exuberant or scared. 

We tend to think most folks might be investing with a bit of FOMO, even though consumer sentiment was relatively weak last year.

If history repeats itself and our data estimates are correct, the combined effect could result in multiple 10+% corrections and a recovery to breakeven by the end of the year.

The moral of the story is “Stay invested, my friends.”

Any opinions are those of Alexander Leonida. The information contained in this document does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but CFG does not guarantee that the foregoing material is accurate or complete. This newsletter: (a) is not an official transaction confirmation or account statement; (b) is not an offer, solicitation, or recommendation to transact in any security; and (c) may not be retransmitted to, or used by, any other party. Investment products are: Not deposits. Not FDIC or NCUA insured. Not guaranteed by the financial institution. Subject to risk. May lose value. 

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