I had predicted only one rate cut in 2024 when asked this question several times earlier in the year. In fact, my prediction was around 25 basis points (bps) and not 50bps as occurred. Federal Reserve Chairman Jerome Powell has projected likely two more rate cuts by year end if the economic data remains consistent. 

Each will likely occur in the next meetings (November and December) if this consistency is achieved. So far, we have seen inflation and unemployment fall from 2.9% and 4.3%, respectively, in July, to 2.4% and 4.1%, respectively, in September. The former is pushing towards the Federal Reserve’s 2% inflation target, and the latter is already within the Federal Reserve’s revised year end unemployment forecast range of 3.8 – 4.4%. 

Therefore, all lights are green for another rate reduction before year-end. Two seems too many. However, I do believe whether there will be two reductions by year-end will be a function of the size of the reduction in November’s Fed meeting. Powell has already indicated that these cuts will be smaller so not 50bps as the last one.

What does the market’s current status signal for the overall health of the nation’s economy and what should individual investors know about the market going forward into 2025?

While we may not be where we would like to be, I believe we are where we should be considering what we could have experienced during the pandemic but for the tools we proactively implemented or implemented early. Those tools permitted us to better manage the effects of the pandemic based on the lessons we learned from our protracted implementation during the 2006-2009 financial crisis. 

Our economy is strong and resilient. We need to demystify the perception that our economy should always be spurring with little or no setbacks. The strength of our economy is best reflected in our resilient capacity or ability to rebound quickly when those setbacks occur. For this reason, I am extremely careful in using the r-(cession) word even when its denotative meaning is met, because of the market’s reaction to its negative connotation. This reaction creates further market anxiety which materializes in a self-fulfilling prophecy of prolonged negative economic activity.

Are there any trends, good or bad, that stand out to you as we approach the end of the calendar year and look ahead to 2025?

Yes. I am an academic and a practitioner, so I believe in the story that data tells. Right now, the data is positive towards reducing and eventually stabilizing inflation and unemployment. 

Interestingly, I may not see it in my grocery bill, but I am reminded that it may be because of the specific items that I buy and that my grocery bill is just one component of several used to calculate inflation. Therefore, I follow the data.

Will current seasonal hiring suggest anything significant investors should consider?

There are a couple of ways I can respond to this. First, the demand for seasonal hiring is reflective of increases in demand for goods/services for which seasonal hiring is intended to respond by providing the needed increase in supply/production of those goods/services, or the seasonal availability of labor supply. The result is increased production irrespective of the reason. 

Although the increased production is expected to be temporary, it is increased production/output nonetheless that is expected to produce increased profitability and returns for investors. 

Second, unemployment is reported after seasonal adjustments. Therefore, a lower unemployment rate at the end of 2024 is a positive signal towards full unemployment and economic strength, which increases investor sentiment.

If you had $1,000 to invest in the market today, where or in what type of stocks would you invest it?

Investing in the market today should reflect your financial goals, investment horizon, and risk appetite/strategy. The specific response that this question requires may be subtly interpreted as investment advice which I am not licensed to provide. 

Instead, I will share that I have a long-term investment horizon based on my financial goals that is supported by wealth accumulation. Therefore, my investment strategy in the market does not differ because of the amount I have to invest. My strategy is more aligned with passive investing which is intended to acquire stocks to hold for the long term so I can build wealth largely through capital appreciation than dividend income over time.

Any other thoughts or suggestions that you would like to share with readers interested in the stock market?

Yes! Investing in the stock market is not for the faint-hearted. Market movements will play on your emotions and cause you to make rash and uncalculated decisions that are often triggered by market anxiety coerced by a herding mentality. Therefore, it is important to know and understand what your financial goals are, investment horizon, and risk appetite. 

Speak to a licensed investment advisor who will help to guide you. But remember, the moment market anxiety triggers you to make an immediate decision, then that is the moment to stop, regroup, remove the emotions, examine the facts and fundamentals, and ensure your investment decision is calculated.