The article discusses the mixed economic performance of 2024 and analyzes the outlook for 2025. While the US experienced strong growth, the UK and Europe faced challenges. The main concern is whether the booming US stock market can sustain its performance or if a bubble will burst, potentially triggering a recession.
Traders work on the floor of the New York Stock Exchange (NYSE) on the last day of trading for 2024 (Photo: Spencer Platt/Getty Images)Is something bad on the way? That is one of the questions posed in the international outlook for 2025. The year 2024 was a mixed one for the global economy , disappointing for the UK and most of Europe, but pretty positive for America.
Indeed, the most important US share index, the S&P 500, ended the year up 24 per cent on the year, a dramatically better performance than that of the FTSE 100, up just under 6 per cent. Share prices are an imperfect indicator of economic performance, but they do convey the prevailing mood of investors, and the plain fact is that in the US they have ended the year on a big up. Here in the UK the worries are mostly about how the economy will react to the tax increases that come in through 2025, and in particular how companies respond to the rise in their national insurance contributions that start in April. In the US the situation is different, with the most important single question being whether the booming equity markets can sustain their extraordinary performance, or is this a bubble that will pop? If the latter, that too might trigger a recession, and that would have knock-on effects for the rest of the world. Economists are making their predictions, which for the UK means modest growth. The OECD has forecast that it will be 1.7 per cent, the IMF 1.5 per cent. That is not bad by European standards and behind only the US and Canada. The outlook for the US is a bit better, with both the OECD and Goldman Sachs expecting 2.5 per cent, against a consensus of 1.9 per cent. But all forecasts need to be taken with a pinch of salt, for past experience shows that they can be totally wrong. So what should we look for that will help tell us whether these reasonably benign forecasts are going to be pretty much spot on, or whether there is indeed something bad around the corner
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