No Landing?: Takeaways from our 2024–2025 Global Outlook

Genevieve Signoret & Delia Paredes

(Hay una versión en español de este artículo aquí.)

We have built three forecast scenarios for the global economy and markets in the next eight quarters. What follows are our main takeaways. For the full forecast report in PDF, click here or visit our Research page.

Main Takeaways

We came into 2024 having clung for a couple of years to our central scenario of a Soft Landing for the U.S. economy, even though incoming data had kept refuting it. Over and over we had responded to the data by pushing out the date the dreaded landing would supposedly occur. And now, two months into the year, again the data reveal no sign of an impending landing. It’s time to recognize we were probably wrong. We’re not ditching Soft Landing altogether but we are ditching it as our base case.

We present a new base case, No Landing, in which the U.S. economy slows down in the second half of 2024 but does not land. It recovers in 2024. Inflation is a perpetual threat, so the Fed cuts rates twice in quarter three but not before and over the entire forecast period cuts only three times.

By December 2025, the Fed policy rate is 4.75%, and the yield on a 10-year Treasury bond is 3.7%.

We adopt No Landing as our base case with weak conviction, assigning to it a subjective probability of just 55%.

We present two alternative scenarios as well, both revived from last quarter and both more pessimistic for growth but more optimistic for long-term rates and thus bond prices, one called Roller Coaster (probability: 10%) and the other Soft Landing (35%).