2024 Looks Brighter Than 2023 Did At This Time: Amazon's AWS Growth Shows Optimism
Economic Outlook for 2024: A Positive Forecast Amid Uncertainty
While there is still a lot of uncertainty in the economy, consumer sentiment, and worries about debt, there is a lot to look forward to.
Almost all economic revisions in the last 6 months have been up.
Unemployment is still at relatively low levels.
Supply chain has normalized to a large extent, though this does mean that many have still overbuilt.
It looks like a virtual certainty (!!) that there will be two or more interest rate cuts this year.
Growth is expected to continue, and (what's more) the universal efforts undertaken to improve profitability in the last 12 months should produce more profit dollars in 2024 than in 2023.
This seems almost universally positive to this observer. Bring out the rose-colored glasses.
Discerning Reality from Perception
What you need to ignore this year - more than the last several years - is people's perceptions of the economy. Perceptions in an election year are colored by politics and agendas. Even more so than the typical year: perception is not very helpful and is instead political positioning.
Instead, look to how people are spending. Amazon (in their recent earnings call) did provide several indications that businesses have stopped looking at their bottom lines and holding tight and are starting to bring new workloads to the cloud.
Amazon called the pullback last year its customers performed "optimization" - meaning cutting cloud workloads. They indicated on the earnings call that this has mostly tapered off, and customers are bringing newer workloads to the cloud again and not just cutting back. AWS growth accelerated to 13%, and Amazon mentioned that these trends should continue into 2024.
This is a great leading indicator of investment. Which, of course, we need! Why?
2023 was one of the more difficult years in SaaS, not only from a sales point of view but also fundraising. Oh, did I mention exits and valuations? Those slowed down.
Last year, at the beginning of the year, I advised most of my companies to adopt their most conservative forecast and only chase incremental upside if those are delivered. For most companies, this turned out to be solid advice.
This year, I am more in the midpoint range. Unlike last year, dust off those aggressive forecasts because you need them. I still don't think it makes sense to adopt them, but you need it to develop your midpoint.
Pick up your head, folks. The world is looking brighter.☀️
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