Barclays Global Research Chair: US Growth Slowdown and Fixed Income Over Equities

Global Growth Slowdown Forecast

• 📉 Barclays anticipates a considerable slowdown in global growth for 2025 compared to 2024 levels.
• 🌍 The firm projects US Q4 over Q4 growth to fall from 2.5% to 0.7% in 2025, a significant deceleration that will impact the rest of the world.

Trade Risks and Tariffs

• ⚠️ Tariffs are identified as a central risk, with potential for a global trade war that will negatively affect export-focused economies like Europe.
• ❓ Policy uncertainty stemming from tariffs is causing businesses to freeze, impacting decision-making and economic activity.

US Economic Vulnerabilities

• 💡 The US savings rate, currently low at 4-4.5%, is highlighted as an Achilles' heel.
• 📉 A potential increase in the savings rate by 1-1.5 points, driven by job cuts, policy uncertainty, rising tariffs, and market pullbacks, could reduce consumption by 100 basis points of growth.

Investment Strategy: Fixed Income Over Equities

• 📊 Barclays now favors fixed income over global equities for the first time in years.
• 🎯 The S&P 500 base call is 5900, but a bare case of 4400 is possible, especially if tariffs reach 20-25% as discussed.
• 🚫 The market appears to be underestimating the impact of trade risks, as evidenced by the minimal reaction of assets like the Mexican peso to recent tariff announcements.
• 🌍 The catch-up of global equities to US performance is considered over; if the US economy falters, other global markets are likely to follow.