A Year of Change: Key Economic and Political Moments from 2024

As we approach the end of 2024, it is worth taking a moment to reflect on the major events that shaped the economy, politics, and markets this year. From record-breaking stock performances to geopolitical tensions and economic policy shifts, this has been a year that demanded attention. Let us revisit these developments and what they may mean for the year ahead.

Economic Growth Amidst Uncertainty

The S&P 500 soared by approximately 27 percent, achieving 51 record highs throughout the year. This performance highlighted investor confidence and resilience, even in a climate of economic challenges and shifting policies. Companies reported strong earnings, inflation eased, and consumer spending remained stable, contributing to the market's upward trajectory.

However, this growth did not come without concerns. Persistent inflation and interest rate hikes kept borrowing costs high, impacting households and businesses. While the US Federal Reserve navigated these pressures effectively, Australia faced unique challenges with slower growth and mounting debt.

Australia's Budget Surplus: Short-Lived Success?

Australia reported a $9.3 billion budget surplus, the second in two years. While this surplus highlighted strong tax collections and corporate profits, it also exposed vulnerabilities. Government spending remained high, and economic slowdowns hinted at potential deficits in the near future. The Reserve Bank of Australia (RBA) resisted interest rate cuts, balancing inflation control with mounting political pressure.

Looking ahead, an election year looms in 2025, and government spending patterns are likely to shift. Economic growth may depend on policy adjustments to sustain momentum and tackle cost-of-living pressures.

The Cost of Living Crisis: A Pressing Concern

Rising living costs dominated headlines. Housing affordability, energy prices, and food expenses continued to stretch household budgets. Inflationary pressures remained, driven by wage growth, material costs, and supply chain disruptions. For instance, construction costs for two-bedroom apartments nearly doubled over four years, reflecting broader inflation trends.

While some relief was expected from falling inflation, government subsidies often fueled additional spending, exacerbating the problem. Consumers dipped into savings to maintain lifestyles, delaying long-term investments like homeownership.

Global Trade and Manufacturing Shifts

Trade dynamics experienced significant shifts. Nearshoring became a key theme, particularly in the US, where companies moved production closer to home. Mexico emerged as a major manufacturing hub, benefiting from low costs and favourable trade agreements.

The US-China trade relationship remained strained. Tariffs, supply chain vulnerabilities, and geopolitical tensions reshaped global manufacturing strategies. China faced slower growth, rising debt, and demographic challenges, weakening its economic influence.

Meanwhile, US trade policies under the Trump administration focused on reshoring manufacturing and revising agreements with Canada and Mexico. These changes aimed to protect American jobs but raised concerns about global trade stability.

Geopolitical Tensions and Their Economic Impact

Conflict zones, particularly in the Middle East and Ukraine, contributed to global uncertainty. The Israel-Palestine conflict escalated, drawing US involvement and raising concerns about energy supply disruptions. Similarly, tensions surrounding Taiwan and China's ambitions kept investors on edge.

These geopolitical risks pushed up defense spending and highlighted vulnerabilities in global supply chains. Companies adapted by diversifying suppliers and investing in domestic production.

The Resurgence of Cryptocurrency

Cryptocurrencies made a strong comeback, driven by market optimism and regulatory developments. Bitcoin and Ethereum saw significant gains, benefiting from broader market trends and increasing institutional interest. Discussions around gold-backed cryptocurrencies hinted at future stability, potentially redefining digital currencies as safe-haven assets.

However, volatility persisted, reminding investors of the speculative nature of cryptocurrencies. Regulatory clarity remained a key focus, with global authorities working toward frameworks to support adoption while managing risks.

The Rise of Alternative Media

This year also marked a shift in how people consumed news and information. Traditional media outlets faced declining audiences, losing ground to long-form podcasts and independent platforms. Influential figures like Joe Rogan and Elon Musk dominated discussions, offering unfiltered insights and challenging mainstream narratives.

This trend underscored the importance of trust and transparency, as audiences gravitated toward sources that provided depth and authenticity. Investors took note, viewing this shift as an opportunity to invest in digital media and communication technologies.

Political Shifts: Elections and Policy Changes

Elections around the world brought new leaders and policies into focus. The US presidential election captured global attention, with a Republican victory reshaping economic and foreign policies. Promises of deregulation, tax cuts, and trade reforms created optimism for business growth but raised concerns about inequality and social programs.

In Australia, political debates centered on spending priorities and economic management. With elections on the horizon, voters faced choices about balancing growth with fairness and sustainability.

Looking Ahead: What to Expect in 2025

The coming year holds promise and challenges. Markets may continue to benefit from strong earnings and improving inflation, but political and geopolitical risks remain. Trade policies, energy transitions, and technological advancements will shape economic trends.

Investors should prepare for volatility, focusing on diversified strategies and long-term planning. Emphasis on sustainability, innovation, and adaptability will be key to navigating the evolving landscape.

Final Thoughts

Reflecting on 2024, it is clear that resilience and adaptability defined the year. From economic highs to political shifts, businesses and individuals faced challenges head-on, finding opportunities amid uncertainty.

As we step into 2025, the focus shifts to building on this foundation. Whether through investments, innovation, or policy reforms, the goal remains the same, creating sustainable growth and financial security.

For those looking to stay informed and ahead of the curve, now is the time to assess strategies and plan for the future. The lessons of 2024 serve as a reminder that preparation and perspective are key to navigating change.

If you found this edition helpful, subscribe to our newsletter and follow our page to stay updated.