Monthly outlook

Our investment and economic outlook, September 2023

September 14, 2023

U.S. fiscal and monetary policies heading in different directions
A line graph depicts U.S. monetary and fiscal policy, as either “tighter” or “looser,” since 1959. Monetary policy, represented by the real federal funds rate, generally appeared tight until about 2007. Fiscal policy, represented by the U.S. budget balance as a percentage of economic output, generally appeared loose. In recent months, the policies have gone in different directions, with fiscal policy loosening and monetary policy tightening.
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 June 30, 2023, running of our Capital Markets Model. The projections are: U.S. equities, 3.7% to 5.7% returns and 17.0% volatility; U.S. value, 4.6% to 6.6% returns and 19.3% volatility; U.S. growth, 0.8% to 2.8% returns and 18.2% volatility; U.S. large-cap, 3.7% to 5.7% returns and 16.7% volatility; U.S. small-cap, 4.3% to 6.3% returns and 22.5% volatility; U.S. real estate investment trusts, 4.2% to 6.2% returns and 20.0% volatility; global equities excluding the United States (unhedged), 6.4% to 8.4% returns and 18.2% volatility; global ex-U.S. developed markets equities (unhedged), 6.1% to 8.1% returns and 16.5% volatility; and emerging markets equities (unhedged), 6.2% to 8.2% returns and 26.2% volatility.
Region-by-region outlook

United States

China

Euro area

United Kingdom

Emerging markets

Canada

Australia

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