Growth Rate Projections

▪ S&P 500 companies demonstrated healthy corporate fundamentals during 4Q 2024. Aggregate EPS grew 12% year/year, beating the consensus expectation of 8% growth at the beginning of reporting season. The median stock grew earnings by a more modest 7%. ▪ We forecast 2025 S&P 500 EPS will grow 11% year/year to $268. Our EPS estimate implies roughly -1% revisions to the top-down and bottom-up consensus forecasts. Earnings revisions appear to have inflected lower over recent weeks and earnings revision sentiment has fallen into negative territory. ▪ Tariffs are a key downside risk to our 2025 EPS forecast. Our economists expect tariff policies will raise the effective tariff rate by 5 pp. We estimate that every 5 pp increase in the US tariff rate would reduce our 2025 S&P 500 EPS estimate by roughly 1-2% and lower our estimated EPS growth rate by approximately 1 pp (to 10%). Heightened policy uncertainty represents downside risk to valuation because it raises the equity risk premium and implies downward pressure on fair value. Reporting season results incrementally affirmed our thematic views for 2025: ▪ The superior earnings growth and returns of the Magnificent 7 relative to the S&P 493 will narrow. The excess earnings growth of the Magnificent 7 relative to the S&P 493 declined to 19 pp in 4Q, the narrowest gap since 1Q 2023. Bottom-up consensus estimates imply the earnings growth premium will continue to decline to 6 pp in 2025 and 4 pp in 2026. ▪ Outsized investments in capex and R&D have supported the exceptional performance of US stocks during the past decade. In 2025, the Magnificent 7 companies will boost their capex by 31% year/year to $331 billion. In October, just four months ago, these companies were expected to spend $263 billion on capex (+13%). ▪ The AI evolution will transition from Phase 2 (infrastructure) to Phase 3 (enabled-revenues). Since the start of 4Q, consensus 2025 EPS revisions to the median Phase 3 stock have been positive compared with negative EPS revisions to the median Phase 2 stock.

What if we could predict the next 10 years of county-level growth of the home health industry? In the last several weeks, two new Medicare datasets have come available that, combined, can give us a deep and granular understanding of where the next decade will take the home health care industry. The first, which was released by MedPAC on June 14th, offers us a detailed breakdown of the 2021 levels of home health usage and average number of visits across all enrollee cohorts, showing that home health demand increases 3X as members pass 80. The second, provided by CMS, details the granular county-level makeup of the Medicare population from 2016 to 2025 by age, gender, race, and payer type, revealing important trends about the aging of the Medicare population and the highly variant growth seen in different regions. By combining these two highly insightful datasets, I built a projection of the next 10 years of county-level Medicare enrollment and home health demand. This model’s results show that the aging of the baby boomer generation (currently age 61-79) could drive 10-year home health patient and visit growth rates at more than double the 20.7% growth of Medicare enrollees. Here are the 10 most surprising things predicted in the data. 1. 10-year growth of 45.1% in home health patients and 48.5% growth in home health visits from 2025-2035. 2. 3M+ baby Boomers turning 80 every year from 2025 to 2035 and using significantly more home health services. 3. Older cohorts dominating home health care utilization, with 80+ enrollees growing from representing 39.9% of home health patients to 59.4%. 4. Average visits per patient driven up from 19.07 to 19.52 as older patients require more intensive care. 5. Fee for service patient volume and visits grow 31.4% and 35.7% respectively, but are dwarfed by MA’s 58.2% and 62.5% growth. 6. MA members continue to receive less visits per home health patient per year, with 18.3 visits/patient vs. 21.1 for FFS. 7. Demand in South and West outpace North and Midwest, growing visits by 51.2% and 50.4% respectively. 8. Counties with lower MA penetration outpace the broader market in visit growth, with those with 0-25% 2025 MA penetration growing visits 49.0%. 9. Mid-sized counties outpace larger ones in both patients and visits at 47.2% and 50.8% respectively. 10. The highest growth comes from suburbs of high growth cities, like Montgomery County-TN, San Bernadino-CA, Hays County-TX and Brunswick County-NC, which will grow demand at rates 1.5X+ higher than the national average. In short- dramatic growth of the home health industry is on it’s way, but that growth will vary incredibly significantly by region and even individual county. If you are interested in using these county-by-county growth projections of enrollment, patients and visits to help plan out your future strategic growth, comment “HH Data” below and connect with me here and I would be happy to share the full file with you.

Anthropic has demonstrated impressive growth, skyrocketing from $87 million to $30 billion in just 27 months, which translates to an annual growth rate of approximately 700%. This rapid expansion prompts an essential question for boards: when will this growth trajectory come to an end? I have created an interactive forecast that suggests an inflection point in 2028, with a potential plateau around $148 billion. Here are three key takeaways for executives: 1. Compute will no longer be the limiting factor by mid-2027. 2. Open-source considerations focus more on margins than on revenue. 3. The timing of AGI remains the main source of uncertainty in long-term forecasts. The forecast is currently live, featuring 11 sliders, three named scenarios, and a detailed 10-page white paper available for review. Run it yourself at : https://lnkd.in/gE8udJsk Where do you think the plateau will ultimately land? Which assumption would you challenge first? #AIEconomics #Forecasting #Anthropic #ComplexityEconomics #AIStrategy

The global economic outlook has become more uncertain due to the evolving conflict in the Middle East and the resulting energy shock, which is weighing on growth and adding to inflationary pressures. Global GDP growth is now projected at 2.9% in 2026 and 3.0% in 2027. The resilience of growth reflects strong technology investment, lower effective tariffs and momentum carried over from 2025. But the outlook remains uncertain and depends on current energy market disruptions proving temporary. ‪These projections are based on a technical assumption that energy prices evolve in line with futures markets pricing.‬ ‪There is signifiant downside risk to those projections.‬ Inflation pressures will persist for longer than previously expected. In the G20, inflation is now projected to be 4.0% in 2026, reflecting the surge in global energy prices. Given these challenges, central banks should remain vigilant and ensure that inflation expectations are well-anchored. Any measures to mitigate the economic impact of the energy shock must be targeted and temporary, considering most governments’ limited fiscal space. Increasing renewable energy generation and energy efficiency can enhance economic security while boosting resilience to future price shocks. Read more in our latest Interim #EconomicOutlook, released today: https://oe.cd/6pf

We’ve updated our #rate forecasts post-election, based on three main assumptions: 1) The #Fed will continue cutting rates, but may proceed more cautiously and maintain some optionality along the way; 2) The economy will continue to grow around trend near term; 3) A Republican sweep raises the prospects of fiscal expansion, which increases growth and inflation expectations. We still believe the direction of travel for interest rates is lower as any policy changes will likely take time to be finalized and implemented, the labor market continues to loosen, and the terminal rate has already repriced higher. But we now see the 10-year US Treasury yield trending towards 4% by June 2025, up from our previous forecast of 3.5%. Read more below.

Trade tensions & policy uncertainty come at a significant cost to global growth—one the world cannot afford.   Our new #GEP25 highlights the consequences of ongoing turmoil:    Global growth is projected to slow to 2.3% this year, its slowest pace since 2008 outside of global recessions.    Growth forecasts have been lowered in nearly 70% of economies across all regions and income groups.    By 2027, average global GDP growth for this decade is expected to be just 2.5%, the lowest rate since the 1960s.    Without sustained growth, developing countries won't be able to create jobs and reduce poverty.    Now, global growth could rebound faster than expected if major economies are able to mitigate trade tensions.    Read more: https://lnkd.in/ehtUDQ3B

Highlights from our updated U.S. economic forecast following the U.S. trade announcement and recent market volatility:     📌 Under our revised baseline scenario, 2025 U.S. GDP growth would fall below 1%, nearly a percentage point below our previous forecast. That would put the economy at a potential “stall speed” that raises the specter of recession.    📌 We also foresee core inflation rising meaningfully above our previous forecast. The combination of stagnating activity and rising prices introduces the prospect of stagflation that would be a strong headwind for both stocks and bonds.    📌 The Federal Reserve may be challenged to lower rates amid a push and pull of lower growth and higher inflation. The Fed could be swayed by meaningful weakening in the labor market.    📌 Outside the U.S., we anticipate weakening economic growth, although softening demand will likely temper any inflationary impulses.    More on our revised outlook here: https://lnkd.in/errDfgay    #VanguardInsights 

India's Economic Outlook for FY25 (recently released) GDP Growth Forecast   - Expected real GDP growth: 6.4% (slowest since the pandemic years).     - Nominal GDP growth: 9.7%, slightly higher than FY24's 9.6%.    - Finance Ministry's projection: 6.5%; RBI's projection: 6.6%. Factors Supporting Growth   - Rural consumption, government investment, strong services exports.    - Robust performance in agriculture, construction, and real estate sectors.  Challenges to Growth     - Persistent inflation, weak urban consumption, sluggish private investments.     - Slowdown in manufacturing activity.  Government Spending & Investment     - Government final consumption expenditure (GFCE) expected to rise 4.1% in FY25 (up from 2.5% in FY24).     - Gross fixed capital formation (GFCF), a proxy for investments, to grow 6.4%, down from 9% in FY24.  Sectoral Highlights     - Manufacturing: Growth expected to slow to 5.3% (from 9.9% in FY24).     - Construction: Growth forecast at 8.6%, down from 9.9%.    - Agriculture: Expected to grow 3.8%, a marked improvement from 1.4% in FY24 due to favourable rainfall.  Private Consumption     - Private final consumption expenditure (PFCE) expected to rise 7.3%, higher than 4% in FY24.     - Urban consumption faces challenges from high inflation and slowing credit growth.  Trade Deficit     - Expected to decline to ₹1.09 trillion in FY25 (from ₹3.99 trillion in FY24).     - Net exports remain a drag on growth due to consistent negative performance.  Quarterly Trends     - Slow growth in Q2 FY25 (5.4%) attributed to reduced government spending during elections and weak urban markets.     - Economy expected to rebound in the second half of the fiscal year.  Economic Size     - Real GDP projected at ₹184.88 trillion in FY25 (up from ₹173.82 trillion in FY24).  This summary highlights the mixed outlook for India’s economy in FY25.

🌍 UK GDP Outlook in a Global Context: 2023-2025 Insights Following my post last week about the current UK GDP, this week I delve ahead to the next 18 months to examine the prospects for the future. Over this period, the UK’s economic journey appears to be one of moderation, echoing a broader global trend of slowing growth. UK's Prospective GDP Path: (According to the Bank of England) ✔️ Q3 2023: Expected GDP growth of 0.8% ✔️ Q3 2024 and Q3 2025: Slowing to 0.3% ✔️ 2026: Expected growth of over 1% These negligible projections align with a broader deceleration, with calendar-year GDP growth expected to be: ✔️ 0.5% in 2023 and 2024 ✔️ 0.25% in 2025 ✔️ Four-quarter GDP growth picks up to just over 1% by Q3 2026 Despite avoiding (narrowly) a recession, growth remains marginal. Downside possibilities seem more possible than upsides. 🤔 Room for Stimulating Growth? The bank suggests the weakening of GDP into 2024 results from past increases in the Bank Rate affecting demand (with further rates to come). The Government could consider more substantial investments in infrastructure, to stimulate the economy and potentially resolve some of the UK's longstanding productivity issues. 🌍 Global Context: According to the IMF: ✔️Global growth is expected to slow to 3.0% in both 2023 and 2024, following a 3.5% increase in 2022. ✔️Advanced economies (including the UK) are projected to see average growth of 1.5% in 2023 and 1.4% in 2024. ✔️Notably, these forecasts place UK economy growth at 1% in 2024—on par with the US but lagging a resurgent Spain at 2%. Although there is a difference in forecast between growth predicted by the BoE and the IMF the message is still growth will be small. 🛑 Risks on the Horizon: The forecasts, both for the UK and globally, are fraught with uncertainty. Additional shocks, such as extreme weather events or an intensification of conflict in Ukraine, could complicate the economic picture further. 🔍 Key Takeaway: The UK, like much of the world, is navigating a complex and uncertain economic environment. Policymakers are tasked with fostering growth while controlling inflation. Whilst the business and economic climate might feel tough, history reminds us that economic slumps always follow much longer periods of economic growth. They key thing is to navigate the tough times and research reminds us to focus upon driving operational efficiency, not only to navigate the challenges but to be best placed to take advantage of the growth that follows. #business #management #economy #accountingandaccountants #growth   -------------------------------------------------------- If you’d like to hear more from me:   ➕ Follow Me. 🔔 Tap the bell on my profile to get notified when I post. 📰 Subscribe to my Monthly Newsletter 'Cut Costs, Unlock Lost Profits'.   Or Email jrimmer@expensereduction.com

𝗜𝗠𝗙 𝗨𝗽𝗴𝗿𝗮𝗱𝗲𝘀 𝗨𝗞 𝗚𝗿𝗼𝘄𝘁𝗵 𝗙𝗼𝗿𝗲𝗰𝗮𝘀𝘁 𝗳𝗼𝗿 𝟮𝟬𝟮𝟰 📈 The IMF has raised its projection for the UK economy, now expecting growth of 1.1% in 2024, up from 0.7%, and 1.5% in 2025. This places the UK alongside France and ahead of Germany, Japan, and Italy in the G7, a significant signal of resilience. The revision is driven by hopes of falling inflation and interest rates, which could boost domestic demand. With Chancellor Rachel Reeves preparing her first Budget to raise £40bn, expectations are high for tax reforms and investment measures. While the IMF's forecast is encouraging, Reeves emphasized the need for structural changes to spur long-term growth, address the challenges facing the NHS, and rebuild a sustainable economy. Globally, inflation is cooling, with UK inflation predicted to fall to 2.6% this year and 2.1% in 2025. While promising, the path to stabilizing debt dynamics for major economies remains challenging. #Economy #UKGrowth #IMFForecast #Inflation #Investment #Budget2024 #Sustainability #GlobalEconomy