By many measures, 2023 shocked Wall Street.
Strategists and economists started the year predicting a recession was pretty much a sure thing. Yet the economy has defied those expectations: The consumer proved resilient, the labor market remained robust, and the AI-driven market rally pushed stocks to record highs.
Looking back at the past 12 months, I’ve had the privilege of speaking with a number of CEOs and policymakers, as well as top strategists and economists, about this year’s top trends and their outlooks for 2024 — all in an effort to make sense of, as Federal Reserve Chair Jerome Powell put it, this "unprecedented" environment.
From the media industry to housing to retail, here are a few trends CEOs, economists, and strategists are predicting for 2024.
The housing market pivots
Real estate has had a brutal 2023.
“It’s a tragedy … We pulled the ladder up just as millennials were coming of homebuying age," Redfin CEO Glenn Kelman told me in September.
The Federal Reserve’s aggressive rate hikes pushed mortgage rates to a two-decade high earlier this year, making it more expensive for potential buyers to purchase a home and prompting would-be sellers to stay put.
The lack of supply led to stiff competition among potential buyers, pushing home prices to all-time highs.
But 2024 could provide some relief for homebuyers. Since peaking at 7.79% in late October, mortgage rates have declined for eight weeks, a trend Moody’s chief economist Mark Zandi expects to continue next year.
“We’ll settle somewhere between 5.5% to 6% a year from now,” Zandi told me on Yahoo Finance Live. “A year from now I see home prices down about 5% nationwide, with some parts of the country down double digits peak to trough.”
National Association of Realtors chief economist Lawrence Yun also expects mortgage rates to fall further, noting the mortgage market has already "pivoted."
“I believe this trend will continue such that we will be in the 6% mortgage range in spring of next year,” Yun told me on Yahoo Finance Live.
Forecasts for lower mortgage rates come as buyers wrestle with the worst affordability challenges in decades, according to a report by Intercontinental Exchange (ICE).
Retailers could struggle in 2024
"The resilient consumer" was a key theme for investors this year as top retail CEOs and analysts touted the ever-strong shopper.
The S&P 500 Consumer Discretionary index surged over 40% this year, far outpacing the S&P 500’s (^GSPC) 24% gain since Jan. 1.
But recent commentary from industry insiders describes a more discerning consumer, a trend that could paint a bleak picture for the economy next year.
"There's some stress on the consumer," Walmart CFO John David Rainey told Yahoo Finance Live last month. “The consumer is being discerning, maybe choiceful.”
Goldman Sachs analyst Elsie Peng called out a rise in credit card card delinquencies in a note to clients, a trend that’s weighing heavily on households that are already debt-burdened.
“Higher interest costs and resumed student loan payments are likely to keep delinquency rates elevated in early 2024, especially for low-income households,” Peng wrote.
Levi’s CFO Harmit Singh noted pressure on the "low- to moderate-income consumer" following the retailer’s third quarter earnings results in October, telling me he’s seeing a "tale of two worlds."
“They’re being a lot more discretionary … we reduced prices to make our products and our price value equation a lot more attractive,” Singh said.
Looking ahead to the new year, a more cautious consumer could put pressure on this year’s retail winners. UBS analyst Jay Sole noted a weakening consumer is a headwind for retailers and their stock prices.
“What we found is that consumers are really feeling cautious," Sole told Yahoo Finance Live. "They're worried about things like having to repay student loans, and as a result, they're thinking that they're going to pull back on spending on discretionary items like apparel, footwear, and accessories."
Streaming consolidation: Era of profit growth
Streamers spent 2023 raising prices and cutting costs as the industry’s priority shifted from subscriber growth to profitability.
The introduction of ad-supported tiers and new bundles, along with crackdowns on password sharing, were among strategies rolled out by legacy companies like Warner Bros. Discovery, Paramount, and Comcast.
“It’s obviously going to affect the bottom line in the short run,” former CNN president Jeff Zucker told me at the Yahoo Finance Invest conference in November. “But that’s what’s going to have to happen as all of these companies make that transition.”
“You have to meet the consumer where they are," Zucker said of the media companies' efforts to grow streaming. "It’s inevitable, they need to do it.”
The future of streaming, and the media industry at large, is a hotly debated subject on Wall Street as millions of Americans cut the cord. According to data from Nielsen, broadcast and cable made up less than half of TV viewing in July for the first time ever, prompting calls for the death of cable.
The quickly changing landscape prompted industry veterans to test the waters. Disney CEO Bob Iger turned heads earlier this year by floating the possible sale of the company’s linear TV networks, a statement he walked back months later.
While there’s no denying cable viewership is struggling, predictions of a total collapse may be premature. Zucker, who told me CNN is a "great asset," didn’t rule out potentially buying the network in the future, arguing cable it still "powerful."
“It will be part of the landscape for the next decade … fewer subscribers, but even at 45, 50 million subscribers, it's still a very powerful distribution,” Zucker explained.
Seana Smith is an anchor at Yahoo Finance. Follow Smith on Twitter @SeanaNSmith. Tips on deals, mergers, activist situations, or anything else? Email seanasmith@yahooinc.com.
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