Insights

Is the economy really booming?

Henry

With the layoffs happening left and right more and more people are getting concerned if the recession is on the horizon. Predicting a recession is never a fruitful endeavor as no one wants to be another boy crying wolf all the time

Still, looking at recent numbers might help to better understand where we stand:

1️⃣ Conference Board Leading Indicators show weakness among all the major components at levels we only saw in 2008 GFC, COVID-19 recession and Dotcom Bubble

2️⃣ Huge difference between S&P500 and Russel2000. While S&P - a value weighted index dominated by only 7 big Tech companies - is breaking new levels driven by hype in AI and automation, a more broader Russel index is still down 15% from its all time highs

3️⃣ Visa Global Momentum Spending Index shows decline in spending across major countries like US, AU, UAE, and partially UK/I

4️⃣ Quoting recent SP report for 2024: “Defaults have already picked up to above historical averages in U.S. and Europe, and are poised in increase further as debt maturities ramp up and competition for funding intensifies”

5️⃣ PitchBook M&A report predicts 2024 deal multiples 22% lower in comparison to 2023 with exceptions in Healthcare, Energy and Retail

While the overall CIO consensus remains positive it is important for businesses to be on a lookout for these trends:

❗️Digital transformation will continue to be a big thing for 2024-2025 as businesses will explore more opportunities to streamline their operations

❗️Risk management together with Innovation management will become a priority for decision makers

❗️More resilient industries (Gaming, Tech, Healthcare) will continue to grow but at a slower rate as an erosion of margins is already taking place