Monthly outlook

Our investment and economic outlook, April 2023

April 21, 2023

We expect a housing rebound in 2024 and 2025
A line graph shows annual percentage changes in U.S. home prices between 2018 and 2024. It shows actual home price changes between 2018 and 2022 and Vanguard’s forecast for home prices for 2023 and 2024. Historical price changes were all positive, hovering in the mid- to low single digits between 2018 and the middle of 2020 before spiking to gains of about 20 percent from mid-2021 through early to mid-2022. The rate of actual price gains then plunged in the latter stages of 2022 to end the year around 5%. Vanguard forecasts show home price changes turning negative in 2023, with the trough being a decline in the low to mid-single digits. Vanguard forecasts show price declines moderating in the latter stages of 2023, with prices rising once again in 2024.
Vanguard’s outlook for financial markets
A table presents Vanguard’s expectations for the ranges of annualized returns, as well as median levels of volatility, for nine classes of equity securities. All the projections are based on the December 31, 2022, running of our Capital Markets Model. The projections are: U.S. equities, 4.4% to 6.4% returns and 17.2% volatility; U.S. value, 4.5% to 6.5% returns and 19.8% volatility; U.S. growth, 2.4% to 4.4% returns and 18.3% volatility; U.S. large-cap, 4.3% to 6.3% returns and 16.9% volatility; U.S. small-cap, 4.7% to 6.7% returns and 22.6% volatility; U.S. real estate investment trusts, 4.6% to 6.6% returns and 20.3% volatility; global equities excluding the United States (unhedged), 6.7% to 8.7% returns and 18.5% volatility; global ex-U.S. developed markets equities (unhedged), 6.5% to 8.5% returns and 16.7% volatility; and emerging markets equities (unhedged), 6.3% to 8.3% returns and 26.3% volatility.
A table presents Vanguard’s expectations for the ranges of annualized returns, as well as median levels of volatility, for eight classes of fixed income securities and the rate of U.S. inflation. All the projections are based on the December 31, 2022, running of our Capital Markets Model. For fixed income securities, the projections are: U.S. aggregate bonds, 4.0% to 5.0% returns and 5.5% volatility; U.S. Treasury bonds, 3.6% to 4.6% returns and 5.8% volatility; U.S. credit bonds, 4.5% to 5.5% returns and 5.2% volatility; U.S. high-yield corporate bonds, 6.1% to 7.1% returns and 10.2% volatility; U.S. Treasury Inflation-Protected Securities, 3.0% to 4.0% returns and 5.0% volatility; U.S. cash, 3.4% to 4.4% returns and 1.4% volatility; global bonds ex-U.S. (hedged), 3.9% to 4.9% returns and 4.4% volatility; and emerging markets sovereign bonds, 5.6% to 6.6% returns and 10.6% volatility. The rate of U.S. inflation is forecast at 2.0% to 3.0%, with 2.3% volatility.
Region-by-region outlook

United States

China

Euro area

United Kingdom

Emerging markets

Canada

Australia

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