U.S. economic slowdown likely ahead

Sources: Bloomberg, Wells Fargo Securities, and Wells Fargo Investment Institute. Quarterly data from July 1, 2017 to September 30, 2023. Q4 2023 – Q3 2024 are Wells Fargo Securities forecasts, as of December 14, 2023. Forecasts are not guaranteed and are subject to change. GDP = gross domestic product. QOQ = quarter over quarter. SAAR = seasonally adjusted annual rate. Forecasts are based on certain assumptions and on views of market and economic conditions which are subject to change.

Key Takeaways

  • Elevated interest rates, and possible tighter liquidity conditions could lay the groundwork for a deepening economic slowdown, in our view.
  • We expect slowing economic and profits growth, combined with higher interest expenses tied to higher financing costs, to create headwinds for further stock gains by early 2024.