Full of sound and fury: What the Bard might have said about 2024

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Subscribe to enjoy similar stories. 2024 has been an eventful year from the point of view of economists who spent time changing forecasts and guessing moves of various central banks. Ten themes stand out that may have led Shakespeare to remind us that “all the world’s a stage," and all the men and women merely players.

The first is Fed action: All central banks say that they look at domestic conditions when framing policy. But traders and analysts always trace a link to the Federal Reserve, often in the belief that what the US central bank does drives all other policies. While central banks are steadfast in approach, bond yields are sympathetic to US Treasury yields and the market sees this as vindication.

They trace the difference in yield spreads and look to the Fed for direction. “And thereby hangs a tale," as the Bard from Strafford on Avon may have said. Second, a lot of discussion space was occupied by the subject of urban stress.

One had heard of rural stress when monsoons fail, but urban stress was new. It is now accepted that spending is driven by income earned and the salaries paid by India Inc. The rich can keep spending as they have deep pockets, but their demand easily reaches saturation.

We need other classes to spend. Since products like toothpaste, shaving cream, hair oil, etc, are essentials, purchases might have shifted to products made by the unorganized sector. But then, as Shakespeare would say, “What’s past is prologue." Third, economists grew obsessed with chances of a cut in the repo rate, as if it’s the only variable that matters for growth.