Panmure Liberum is a new force in UK Investment Banking and Corporate Broking

As a strategist who uses macroeconomic and other ‘big picture’ data to assess the fortunes of stock markets, I would obviously argue that investors ignore the macroeconomic environment at their peril. Unbiased as I am in this matter, I have chosen to discuss today a study by economists at the Federal Reserve (who are surely just as unbiased as I) that shows analysts can improve their earnings forecasts by paying more attention to macro forecasts.

What is the most efficient way to grow the UK economy, and improve living standards? It is a question that often triggers a sharp intake of breath from economists, and the answer invariably involves capital. Too little capital has been invested by the UK private and public sectors over the last four decades. An average of 17% of national income has been invested across this period. This compares to 20% among other G7 economies. A three percentage point difference may not sound like much but - compounded over forty years in a 2.5 trillion-pound economy - that is a lot houses, roads, data centres, power networks, and research.

I mean really fast. Faster than the internet, according to a survey by the Federal Reserve Bank of St. Louis from August this year. Just 2.5 years after the chatGPT debut in November 2022, some 40% of Americans reported using generative AI at least some of the time, for work or at home. At the same point in the lifecycle of the internet, the adoption rate among Americans was just half that at about 20%.