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10-Year Annualized Forecasts for Major Asset Classes

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10-year annualized forecasts for major asset classes

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10-Year Annualized Forecasts for Major Asset Classes

While there’s no way of predicting the future, quantitative models can help us come up with a general idea of how different asset classes may perform in the future.

One example is Vanguard’s Capital Markets Model (VCMM), which has produced a set of 10-year annualized return forecasts for both equity and fixed income markets.

Visualized above, these projections were published on May 17, 2023, and are based on the March 31, 2023 running of the VCMM.

Equity Returns

The equity forecasts from this infographic are listed in the following table.

Asset ClassReturn Forecast (lower)Return Forecast (upper)Median Volatility
U.S. Equities4.1%6.1%17.0%
U.S. Value4.4%6.4%19.6%
U.S. Growth1.4%3.4%18.2%
U.S. Large-Cap4.1%6.1%16.7%
U.S. Small-Cap4.4%6.4%22.3%
U.S. Real Estate Investment Trusts4.4%6.4%20.1%
Global Equities ex-U.S. (unhedged)6.4%8.4%18.2%
Global ex-U.S. Developed Markets Equities (unhedged)6.1%8.1%16.6%
Emerging Markets Equities (unhedged)6.1%8.1%25.9%

A key takeaway here is that Vanguard expects international equities to outperform U.S. equities over the next decade.

We believe that the valuation-based expansion in U.S. equities is sowing the seeds for lower returns in the decade.

A valuation-based expansion refers to the increase in a company’s market value, rather than its intrinsic value. In other words, Vanguard doesn’t believe that current U.S. equity valuations are justified, and that this will dampen performance over the next decade.

Cited reasons for international outperformance include more favorable valuations, higher dividend payout ratios, and a potentially weaker U.S. dollar.

Fixed Income Returns

Now turning to fixed income, here are the forecasts used in this infographic.

Asset ClassReturn Forecast (lower)Return Forecast (upper)Median Volatility
U.S. Aggregate Bonds3.6%4.6%5.5%
U.S. Treasury Bonds3.3%4.3%5.7%
U.S. Intermediate Credit Bonds4.2%5.2%5.2%
U.S. High-Yield Corporate Bonds5.5%6.5%10.1%
U.S. Treasury Inflation-Protected Securities2.7%3.7%5.0%
U.S. Cash3.4%4.4%1.4%
Global Bonds ex-U.S. (hedged)3.6%4.6%4.4%
Emerging Markets Sovereign Bonds5.6%6.6%10.9%
U.S. Inflation2.0%3.0%2.3%

Several bond indexes saw record-breaking declines in 2022 thanks to the unprecedented speed of interest rate hikes. Despite this turmoil, Vanguard believes that investors with a longer horizon will actually be better off as a result. The reasoning here is that cash flows can now be reinvested at much higher rates, which over time should offset any declines in an investor’s bond portfolio.

Vanguard also expects U.S. inflation to be contained over the next decade. The firm has confidence in the ability of central banks to keep inflation at their target rates (2% in most developed economies).

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Globalization

Top U.S. Food Imports by Origin Country

This infographic shows the top exporting countries for U.S. food imports, ranging from exotic fruits to meat, oils, spices, and more.

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Top U.S. food imports from countries

Top U.S. Food Imports by Origin Country

The U.S. is a major producer and exporter of food products, but did you know that it’s also one of the world’s largest food importers?

Due to seasonality and climate, some foods can’t be grown on home soil, at least enough to fulfill consumption demands. Indeed, many familiar grocery items come from other countries.

This infographic from Julie Peasley uses data from the Chatham House Resource Trade Database (CHRTD) to show where the U.S. gets its food from, highlighting the top exporting countries of various imported food items.

The Types of Imported Foods

The U.S. imported around $148 billion worth of agricultural products in 2020, and according to the USDA, this has since risen to $194 billion in 2022.

Around 50% of all U.S. agricultural imports are horticultural products like fruits, vegetables, tree nuts, and more. Other large import categories include sugar and tropical products, meat, grains, and oilseeds.

With that context in mind, we break down each category and highlight the five foods with the largest single-origin import value.

Farm Fresh: Fruit and Vegetable Imports

U.S. fruit and vegetable imports have been on a steady rise since 2000. In fact, between 2011 and 2021, fruits and nuts imports made up 44% of domestic consumption, while 35% of vegetables consumed in the U.S. came from outside the country.

Mexico is by far the largest exporter of fruits and vegetables to the United States.

Fruit or VegetableLargest Exporting CountryU.S. Import Value (2020)
Tomatoes🇲🇽 Mexico$2.5B
Avocados🇲🇽 Mexico$2.1B
Peppers🇲🇽 Mexico$1.4B
Bananas🇬🇹 Guatemala$1.0B
Strawberries🇲🇽 Mexico$897M

The U.S. imported $2.5 billion worth of tomatoes from Mexico in 2020, representing 31% of international tomato trade. Avocados, native to central Mexico, were nearly as popular with $2.1 billion worth of imports.

Generally, the largest exporters of fruits and vegetables to the U.S. are North and South American countries, with products often coming from Guatemala, Chile, Peru, Costa Rica, and Brazil.

Beefed Up: Meat Imports

The U.S. is the world’s largest overall consumer of beef (or bovine meat), and the third-largest per capita consumer at nearly 37.9 kg (84 lbs) per person per year.

Therefore, despite being one of the top producers of beef, the country still imports a lot of it.

MeatLargest Exporting CountryU.S. Import Value (2020)
Bovine Cuts🇨🇦 Canada$1.4B
Bovine Cuts, Frozen🇳🇿 New Zealand$839M
Sheep Meat🇦🇺 Australia$643M
Swine Hams, Shoulders, and Cuts🇨🇦 Canada$559M
Bovine Cuts, Bone In🇲🇽 Mexico$449M

Precisely, The U.S. imported $8.7 billion worth of meat in 2020. Canada was the largest source of imported beef, with the U.S. accounting for more than 70% of all Canadian beef exports.

The sources of meat imports are more geographically diverse than fruits and vegetables, with billions of dollars of imports coming from New Zealand and Australia.

Making Waves: Seafood Imports

Despite plenty of coastlines, the U.S. imports 70–85% of all its seafood and accounted for 15% of global seafood imports in 2020 at $21.8 billion.

Frozen shrimp and prawns were the top seafood import, with $1.9 billion worth from India.

Fish and SeafoodLargest Exporting CountryU.S. Import Value (2020)
Shrimp and Prawns, Frozen🇮🇳 India$1.9B
Fish Fillet or Meat🇨🇱 Chile$1.4B
Fish Fillet or Meat, Frozen🇨🇳 China$884M
Lobsters🇨🇦 Canada$764M
Crabs, Frozen🇨🇦 Canada$719M

The largest source of U.S. seafood imports overall with $3.1 billion total was Canada, which leads in lobster, crab, and whole fish imports. It was followed by Chile at $2.1 billion, primarily for parts of fish (fillet or meat, fresh or chilled).

Other Foods: Oils, Grains, Coffee, and More

There are plenty of other types of foods and agricultural products that the U.S. relies on other countries for. Here are the largest single-origin U.S. food imports for the remaining categories:

FoodCategoryLargest Exporting CountryU.S. Import Value (2020)
Canola Oil, RefinedOils🇨🇦 Canada$1.4B
Coffee, Not RoastedStimulants/Spices🇨🇴 Colombia$1.0B
Cashews, ShelledNuts/Seeds/Beans🇻🇳 Vietnam$960M
Raw Sugar, RefinedSweetners🇲🇽 Mexico$723M
RiceCereals🇹🇭 Thailand$713M
CheeseDairy🇮🇹 Italy$310M

Some of the highest and potentially surprising exports? Imports of refined Canadian canola oil totaled $1.4 billion in 2020, while Vietnam exported a whopping $960 million worth of cashews to America.

A Global Plate: The Diversity of U.S. Food Imports

The amount and value of food imported to the U.S. highlights the diversity of consumer preferences and the importance of global food stocks, considering America is one of the world’s leading food producers.

With countries having to rely on others to satisfy demand for limited production supply or exotic foods, the interconnectedness of the global food system is both vital and delicate.

What’s clear is that the U.S. food plate is indeed a global one, with many foods taking remarkable journeys from farm to fork.

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