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SIFMA economist roundtable paints rosy picture for US in 2025 - Industry roundup: 9 December

Continued economic growth, rate cuts, and declining inflation forecast for US

The Securities Industry and Financial Markets Association (SIFMA) has published the results of its Economic Advisory Roundtable biannual survey. The Roundtable is comprised of the chief US economists from over 20 global and regional financial institutions. 

The survey assesses the economic landscape and monetary policy and highlights expectations for 2.4% real GDP growth in 2024 and 1.9% in 2025. The majority of the economists expect three to five Federal Reserve rate cuts by the end of 2025, with a range of estimates for the aggregate number of cuts.

All of the economists expect a rate cut at the December FOMC meeting with 90% forecasting a cut of 25 basis points (bps). The median forecaster looks for the midpoint of the target range to end 2025 at 3.560% (roughly 100 bps in cuts from current rate) and to end 2026 at 3.375% (a total of 125 bps in cuts from the current rate). Nearly 60% of the economists estimate the neutral nominal fed funds rate to be 3.0%-3.5%.

The median forecaster looks for core PCE inflation to end 2024 at 2.8% (year-over-year), which is unchanged from the last full survey in June 2024 and 0.1 percentage points (pps) higher than the September 2024 flash poll. In 2025, core PCE inflation is estimated to decrease to 2.4%, up 0.1 pps from the June survey. The top factors influencing forecasts for core inflation estimates are wage growth, growth in domestic demand, and monetary policy.

The median economist forecasts real GDP will grow 2.4% in 2024; up 0.8 pps from SIFMA’s last full survey in June 2024 and up 0.3 pps from the September 2024 flash poll. For 2025, the median real GDP forecast is 1.9%, 0.1 pps lower from the June survey. Almost 50% of the economists put the probability of recession from 0% to 15%. The top factors impacting US economic growth are the domestic labour market and US trade and monetary policies. US trade policy also shows up near the top in both upside and downside risks to the economy.

“As we approach the end of 2024, our survey reveals the US economy’s extraordinary growth and projects continued strength into 2025,” said Jay Bryson, Ph.D., Chair of the SIFMA Economist Roundtable and Managing Director and Chief Economist at Wells Fargo Securities. “Nearly half of the panelists place the odds of recession in 2025 at less than 15%, while one-third predict a likelihood between 15% and 30%. The dispersion of forecasts for 2025 indicates some difference of views that may reflect policy uncertainty with the incoming administration. Overall, real GDP growth should remain solid, inflation should continue to recede, and the Federal Reserve will cut rates lower, signalling continued economic stability.”

 

Financials sectors continue to lead European growth rankings in November

Emerging signs of service sector challenges were seen in November, according to the latest S&P Global Europe Sector PMI data, as a greater number of sectors recorded a decline in output. Renewed decreases in activity at Transportation, Real Estate and Pharmaceuticals & Biotechnology firms resulted in 12 of the 20 monitored segments registering a drop in output, the greatest number since August.

In fact, only Forestry & Paper Products, Tourism & Recreation and Other Financials saw accelerations in expansions in output during November. The latter moved back to the top of the growth rankings table, meanwhile, alongside Banks. Nonetheless, a renewed fall in Real Estate activity and solid upturns in Media and Tourism & Recreation pushed the broader Consumer Services category above Financials as the top performer on the month.

Despite a faster rise in Forestry & Paper Product production, the broader Basic Materials category continued to signal the weakest performance as contractions in the Metals & Mining and Chemicals sectors quickened. That said, Automobiles & Auto Parts was the weakest individual sector performer for the sixth month running.

Demand conditions proved more challenging in November, as only six of the monitored sectors recorded a rise in new orders. Moreover, only four segments registered an accumulation in backlogs of work as spare capacity was evident among many manufacturing- and services-based sectors.

Subsequently, 12 of the monitored sectors indicated job shedding midway through the fourth quarter. This is the joint-largest number of sectors recording lower employment since January (alongside September 2024).

Although the vast majority of monitored sectors reported hikes in cost burdens during November, nearly half of the segments surveyed reduced their selling prices. Many manufacturing-based sectors continued to cut their output charges, with services-based segments largely able to raise prices. The exceptions to this were Beverages & Food where demand conditions were conducive to increases in output charges, and Media where selling prices were broadly unchanged on the month.

 

Ant International joins Swift interoperability programme

Ant International has joined Swift's Network Interoperability Reference Implementation programme, which brings together a number of global payment service providers (PSPs) to explore interoperability using Swift.

The programme is a pre-pilot designed to improve payment transparency in cross-border payments, by exploring the business scenarios on cross-border end-to-end transactions tracking through banks, PSPs and tracking on e-wallet use cases.

Earlier this year, Ant International also became a member of Swift, streamlining its connection to multiple banks. This is in line with Ant International's aim of enhancing its global treasury management solutions by improving the interoperability of its blockchain and tokenised deposits platform.

“With this programme, we aim to leverage Swift’s existing infrastructure and Ant International’s experience and technological capabilities in cross-border and digital payments to deliver more convenient and seamless cross-border transaction experiences to merchants of all sizes, all over the world,” commented Kelvin Li, Head of Platform Tech at Ant International.

 

China's stimulus may partially offset US tariffs in 2025

China’s economy is projected by Goldman Sachs Research to grow at a slower pace in 2025, as the government’s stimulus efforts partially offset the impact of potential tariffs from the US.

Real GDP growth is predicted to decelerate to 4.5% next year from 4.9% in 2024. Goldman Sachs Research’s forecast assumes a 20 percentage-point increase in the effective tariff rate imposed by the incoming Trump administration on Chinese goods, which would weigh on China's real GDP by 0.7 percentage point in 2025. The forecast also assumes that Chinese policymakers will introduce fresh stimulus to blunt the impact of tariffs.

“The choice in front of Chinese policymakers is simple: either to provide a large dose of policy offset or to accept a notably lower headline real GDP growth,” Chief China Economist Hui Shan writes in the team's report. “We expect them to choose the former.”

 

63% of financial services sector struggling to attract younger talent

A survey of those working in UK financial services businesses has identified the key investment areas for such firms looking to attract, retain, and develop top talent. 

The research from Davies, a professional services and technology business serving insurance and highly regulated markets, found that while 70% of respondents agreed that their organisation has a positive supportive culture, 63% felt that more encouragement was needed to attract younger people to the financial services industry. 

The research also found that the top challenge when attracting top talent was meeting/exceeding salary, with 43% of senior leaders citing it as a challenge.  

Other key challenges relating to retaining and developing talent included offering a balance between remote and on-site work (38% of senior leaders citing it as a challenge), offering comprehensive benefits packages (36%), demonstrating clear career development opportunities (35%) and caring for employee mental well-being (33%).  

The digital skills gap was another area of focus for the survey, which found that while 65% of those in middle management (or lower) positions believe they have sufficient digital skills to excel at their job, 63% of senior managers believe lack of digital skill is an issue in their workforce, with 30% describing it as ‘a very serious issue’. 

 

Zopa raises €80m to accelerate growth ahead of 2025 current account launch

Digital bank Zopa has raised just over €80m (GBP £68m) in an equity funding round led by A.P. Moller Holding, with significant participation from existing investors.

A.P. Moller Holding is one of the largest direct investors in Denmark with $32bn of net asset value. Its objective is to build and develop businesses by driving long-term value and growth through engaged and valued ownership.

The funding will be used to support Zopa’s growth as it prepares to launch its current account in 2025 and a GenAI proposition that aims to reinvent how people interact with their money.

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