Key takeaways

  • J.P. Morgan’s Global Investment Strategists believe that while the U.S. economy could see a growth slowdown in the first half of 2024 it will likely avoid a recession.
  • Higher bond yields and reasonable stock valuations mean that forward-looking returns seem more promising than they have been in more than a decade.
  • Other themes for 2024 include a potential boost in productivity from artificial intelligence (AI) and governments incentivizing politically-important industries.


Megan Werner

Digital Content Writer & Editor, J.P. Morgan Wealth Management

As you check up on your finances heading into the new year, you might find a bit of good news: The recession that everyone expected in 2023 never materialized. Looking into 2024, our strategists now expect that while the U.S. economy is likely to slow, it should avoid recession. The lower likelihood of a painful economic downturn should bode well for your investment portfolio and financial decision making going into the new year.

That said, the reduced risk of a recession is just one element in a shifting financial landscape. As the economy has emerged from the COVID-19 pandemic over the past few years, the most important development in the markets has been the historic increase in bond yields. As you plan for the year ahead, it’s critical to recognize of the impact of higher interest rates.

In their Outlook 2024 report (PDF), the Global Investment Strategists at J. P. Morgan focus on what a 5% interest rate world could mean for the economy, financial markets and your portfolio. Our strategists believe that this unique environment has opened up pockets of opportunity for investors over the coming year. This will give you more flexibility to choose different types of investment vehicles that align with your specific goals.

U.S. highlights

  • Our strategists believe that while we could see a growth slowdown in the first half of 2024, growth should resume in the second half of the year.  They have placed the probability of a deep recession at 25%.
  • A shrinking gap between job openings and unemployed workers in the U.S. – as well as a cooldown in U.S. wage growth to less than 5% from a peak over 7% – suggest that the Federal Reserve is making progress in its fight to reduce inflation.
  • Our strategist team estimates that the Fed could start to cut interest rates sometime in the second half of 2024. If the rate cuts come in response to normalized inflation rather than a recession, the cutting cycle will likely be slower than what we saw during the early 2000s, Great Financial Crisis (GFC) and COVID-19 pandemic.
  • The Bipartisan Infrastructure Bill, CHIPS Act and Inflation Reduction Act have contributed to an unprecedented surge in manufacturing construction over the past two years.

Global highlights

  • Following interest rate hikes by central banks around the world, global inflation has moderated from its peak of close to 10% in the summer of 2022 to a current pace of less than 5%. Although geopolitics and energy prices pose a risk, our strategists see more gravity weighing down inflation than buoyancy pushing it up.
  • While offering investors the luxury of choice today, higher yields have also been a headwind to the broad global economy. Global multi-asset portfolios haven’t gained much ground since November 2020, and investment-grade debt has posted negative total returns for three years in a row. In other words, high rates may be beneficial in some ways, but the price has largely been paid by the investors who have seen relatively underwhelming returns in their global portfolios as a result.
  • Artificial intelligence (AI) may see a potential boost in productivity, with governments incentivizing certain industries like financials, airlines and healthcare.
  • Governments around the globe are also incentivizing investments in important areas like national security, the energy transition, semiconductors, infrastructure and supply chains.

Stocks vs. bonds in 2024

One big impact of higher interest rates is that bonds are now as competitive with stocks as they have been since before the GFC. With bonds offering such promising returns, you might be wondering if fixed-income investments deserve a larger share of your portfolio.

Our strategists estimate that U.S. aggregate bonds should deliver 5%-plus returns over the next 10-15 years with just a quarter of the volatility of large-cap stocks. In exchange for the added volatility, U.S. large-cap stocks should reward investors with returns of 7% over the same time frame, according to our team.

The best way for you to navigate this tradeoff thanks to newfound investment flexibility, depends on your personal situation and goals.

If your priority is to lower your downside risk and limit the range of potential outcomes, it could make sense to shift toward more bond exposure. But if you’re aiming to maximize your upside potential, you might want to keep your portfolio tilted toward stocks.

What about cash?

The higher-yield environment might also have you considering whether it’s worthwhile to hold your assets in cash into next year and beyond.

Although cash has a place in every investor’s plan and looks even more attractive today, our strategists expect cash to underperform most asset classes in 2024.

While there is nothing wrong with holding cash – and clients have more than doubled their allocation to cash in investment accounts since 2021– it’s important to consider whether cash has the right attributes to help you reach your objectives. Rather than overdoing it on cash in your portfolio, our team recommends taking an intentional approach by defining a goal and then funding a pool of capital designed to achieve it.

What if inflation is here to stay?

Inflation in the U.S. has fallen to between 3.5% and 4% on an annual basis, down from its highs of over 8% in the summer of 2022. Our strategists predict that inflation will continue to decline toward the Fed’s target, likely settling between 2% and 2.5%. A “higher-for-longer” stance from the Fed (i.e., when certain prices or wages aim to keep inflation above the target rate), a normalized labor market and a lower impact of energy price swings on the overall price basket should help keep inflation in check.

A continued cooldown in inflation will likely come as welcome news, but there are still a few inflationary pressure points to keep an eye on. For one thing, industrial policy and the transition to clean energy could support higher commodity prices. It’s also possible that the inflation shock of 2021 and 2022 could echo in consumers’ inflation expectations.

The bottom line

Heading into 2024, J. P. Morgan’s Global Market Strategists believe that you have more options for your portfolio than at any time since before the GFC. You may be able to take advantage of higher interest rates to reach your goals while taking on less risk than you would have thought possible just two years ago.

As you consider your path forward in a 5% interest rate world, it’s always worth talking with a financial advisor about the best way to align your portfolio with your goals.

Connect with a Wealth Advisor

Our Wealth Advisors begin by getting to know you personally. To get started, tell us about your needs and we’ll reach out to you.

Connect now


This material is for informational purposes only, and may inform you of certain products and services offered by J.P. Morgan’s wealth management businesses, part of JPMorgan Chase & Co. (“JPM”). Products and services described, as well as associated fees, charges and interest rates, are subject to change in accordance with the applicable account agreements and may differ among geographic locations. Not all products and services are offered at all locations. If you are a person with a disability and need additional support accessing this material, please contact your J.P. Morgan team or email us at for assistance. Please read all Important Information.

GENERAL RISKS & CONSIDERATIONS. Any views, strategies or products discussed in this material may not be appropriate for all individuals and are subject to risks. Investors may get back less than they invested, and past performance is not a reliable indicator of future results. Asset allocation/diversification does not guarantee a profit or protect against loss. Nothing in this material should be relied upon in isolation for the purpose of making an investment decision. You are urged to consider carefully whether the services, products, asset classes (e.g. equities, fixed income, alternative investments, commodities, etc.) or strategies discussed are suitable to your needs. You must also consider the objectives, risks, charges, and expenses associated with an investment service, product or strategy prior to making an investment decision. For this and more complete information, including discussion of your goals/situation, contact your J.P. Morgan representative.

NON-RELIANCE. Certain information contained in this material is believed to be reliable; however, JPM does not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. No representation or warranty should be made with regard to any computations, graphs, tables, diagrams or commentary in this material, which are provided for illustration/reference purposes only. The views, opinions, estimates and strategies expressed in this material constitute our judgment based on current market conditions and are subject to change without notice. JPM assumes no duty to update any information in this material in the event that such information changes. Views, opinions, estimates and strategies expressed herein may differ from those expressed by other areas of JPM, views expressed for other purposes or in other contexts, and this material should not be regarded as a research report. Any projected results and risks are based solely on hypothetical examples cited, and actual results and risks will vary depending on specific circumstances. Forward-looking statements should not be considered as guarantees or predictions of future events.

Nothing in this document shall be construed as giving rise to any duty of care owed to, or advisory relationship with, you or any third party. Nothing in this document shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by J.P. Morgan and/or its officers or employees, irrespective of whether or not such communication was given at your request. J.P. Morgan and its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transactions.

Legal Entity and Regulatory Information.

J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment adviser, member FINRA and SIPC. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. Certain custody and other services are provided by JPMorgan Chase Bank, N.A. (JPMCB). JPMS, CIA and JPMCB are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

Bank deposit accounts and related services, such as checking, savings and bank lending, are offered by JPMorgan Chase Bank, N.A. Member FDIC.

This document may provide information about the brokerage and investment advisory services provided by J.P. Morgan Securities LLC (“JPMS”). The agreements entered into with JPMS, and corresponding disclosures provided with respect to the different products and services provided by JPMS (including our Form ADV disclosure brochure, if and when applicable), contain important information about the capacity in which we will be acting. You should read them all carefully. We encourage clients to speak to their JPMS representative regarding the nature of the products and services and to ask any questions they may have about the difference between brokerage and investment advisory services, including the obligation to disclose conflicts of interests and to act in the best interests of our clients.

J.P. Morgan may hold a position for itself or our other clients which may not be consistent with the information, opinions, estimates, investment strategies or views expressed in this document. JPMorgan Chase & Co. or its affiliates may hold a position or act as market maker in the financial instruments of any issuer discussed herein or act as an underwriter, placement agent, advisor or lender to such issuer.