As investors think about the outlook for global macroeconomic growth, this article instead takes a look at where corporate earnings growth has been in 2023 and is expected to be in 2024. The short answer is, Wall Street analysts expect earnings growth within secular areas of the market, some cyclical sectors and industries – and primarily in the United States. Of course, we’re referring to expectations, which may be either too optimistic or too pessimistic. That said, our view is that the economy will continue to grow in 2024, albeit at a slower pace, and in that environment, investors will seek out areas of the market where earnings are less sensitive to macro dynamics and can therefore grow regardless. And if the macro environment avoids a downturn, there may even be upside to some of the cyclical industries that currently have low expectations.

Secular, cyclical or defensive?
Let’s first distinguish between cyclical and secular earnings growth. Some industries tend to be tied more tightly to the business cycle while other industries and sectors experience secular growth. Technology is often thought of as secular growth while Energy, Materials and Industrials can be more cyclical because these companies are more dependent on the business cycle. A different example is an industry within Technology, such as Semiconductors, which can be very sensitive to the business cycle, but is also part of a secular growth sector and trend.

During 2023, much of the world experienced slowing – yet still positive – economic growth. The recession that many prognosticators called for has not materialized, yet. While corporate sales and earnings are definitely affected by general macro conditions, the impact varies by industry and sector. Figure 1 categorizes these sectors in the MSCI World Index as Secular, Cyclical or Defensive. This framework is not perfect, as highlighted above. Even so, it can be argued that Technology and Communication Services are secular businesses, as continued population growth and improving living standards support a positive growth case for consumer spending, even though consumers are clearly susceptible to a downturn in the economy. On the other hand, Consumer Staples and Utilities tend to be defensive and less sensitive to the business or economic cycle, and parts of healthcare can be defensive.

Figure 1 – Analyst Net Income Estimates for Companies within the MSCI World Index, by Sector

  CY 2023 CY 2024  
Name Net
% of
Net Income


to Growth
MSCI World Index 3,191,590   0.0 3,508,840 9.9  
Secular 1,027,284 32.2%   1,176,684   4.9%
Information Technology 460,221 14.4% 5.2 534,879 16.2 2.5%
Communication Services 235,395 7.4% 22.8 275,531 17.1 1.3%
Consumer Discretionary 331,668 10.4% 29.3 366,274 10.4 1.1%
Cyclical  1,456,191 45.6%   1,541,344 16.2 2.6%
Energy 294,502 9.2% -29.2 298,686 1.4 0.1%
Materials 145,961 4.6% -31.6 153,757 5.3 0.2%
Financials 688,958 21.6% 14.2 733,282 6.4 1.3%
Industrials 326,770 10.2% 5.5 355,619 8.8 0.9%
Defensive 708,118 22.2%   790,817 16.2 2.7%
Health Care 353,514 11.1% -15.0 412,080 16.6 1.9%
Consumer Staples 183,904 5.8% 1.2 197,927 7.6 0.4%
Utilities 100,277 3.1% 4.1 107,149 6.9 0.2%
Real Estate  70,423 2.2% 0.5 73,661 4.6 0.1%

Source: FactSet, December 4, 2023

Broad earnings in 2023 declined slightly, but there was wide dispersion across sectors
Total net income for the MSCI World index, which represents all developed countries, is expected to be down 1% in 2023 compared to 2022, based on current estimates. Those earnings should come in at about $3 trillion based on actual results and current estimates for the fourth quarter of 2023. For perspective, total sales for all of the companies in this index are estimated to be $30.6 trillion for 2023, up 1.5% from 2022.

That said, when we look more closely, some sectors experienced strong earnings growth this year, such as Consumer Discretionary (+29%), Communications (+22.8%) and Financials (+14%). Others, such as Energy and Materials which tend to be very cyclical, saw a large decline in earnings, primarily due to prices moving lower as inflation came down and growth slowed. Defensive sectors and Technology tended to experience slow growth in 2023, but in the case of Technology, that was coming off the accelerated growth that these companies experienced during Covid. Similarly, within Healthcare, Pharmaceuticals and Biotechnology experienced a decline in growth as so much of that was pulled forward during the pandemic.

Going forward, earnings are expected to be driven by secular and some areas within cyclicals
As we now turn to 2024 to assess where to invest, Figure 2 makes it clear that expectations for the strongest earnings growth are in the Technology, Communication Services and Healthcare sectors. Within Technology, not surprisingly, that is driven by Semiconductor and Software growth. Interactive Media Services, an industry within Communication Services, is dominated by Alphabet and Meta, two companies expected to grow meaningfully in 2024. Within Healthcare, new pharmaceutical drugs related to diabetes and weight loss are expected to power growth. In fact, Danish company Novo Nordisk is the largest driver of net income within the MSCI Denmark component of the index.

Figure 2 – Analyst Net Income Estimates for Companies within the MSCI World Index, by Country

  CY 2023 CY 2024  
Name Net Income
% of
Net Income


to Growth
MSCI World Index 3,191,593   -1.3% 3,508,840 9.9  
United States 1,986,950 62.3% 1.6 2,221,880 11.8 7.5%
Japan 270,866 8.5% 13.8 298,362 10.2 0.9%
Canada 144,980 4.5% -9.3 158,231 9.1 0.4%
Germany 141,156 4.4% -2.9 151,311 7.2 0.3%
United Kingdom 140,241 4.4% -14.3 144,293 2.9 0.1%
France 114,988 3.6% -7.2 120,969 5.2 0.2%
Italy 70,219 2.2% 14.4 69,050 -1.7 0.0%
Switzerland 54,060 1.7% -4.2 59,926 10.9 0.2%
Spain 50,404 1.6% 9.5 52,290 3.7 0.1%
Sweden 37,669 1.2% 16.2 41,634 10.5 0.1%

Source: FactSet, December 4, 2023

Pay attention to earnings growth expectations and look for upside revisions from cyclicals
Earnings growth expectations for the MSCI US Index are strong, at just under 12%. You can see this in the country breakdown, but also in the earnings evolution chart (Figure 3). So the best earnings growth is expected to come from the US, with mid-single-digit earnings growth coming from MSCI Europe and MSCI EAFE.

Figure 3 – 2024 Earnings Growth Estimate Evolution
Source: FactSet

Said differently, the US is pulling up earnings growth expectations for the world. This is due in part to the heavy secular growth contributions from Technology, Communication Services and the US consumer, which are expected to grow 16%, 17% and 10% respectively in 2024. We believe these growth expectations to be reasonable, especially for Technology and Communication Services. And if the economy proves more resilient, especially in the US, we think there could be upside to the Consumer Discretionary estimates and even to some of the more cyclical sectors, such as Financials and Industrials.


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