The U.S. is in the midst of its ninth year of economic recovery from the 2007-2009 “Great Recession,” and we believe 2018 will continue this trend of economic prosperity. It’s been a remarkable stretch of expansion that has now more than doubled the average life of a typical recovery (which is 4 years, or 45 to 57 months).
The economy performed exceptionally during calendar year 2017—and not just in the U.S., but globally too, as most of the major and minor global economies were growing and recovering synchronously. The positive U.S. economic results in 2017 can be attributed to this global growth, as well as to fiscal stimulus initiated by the current presidential administration.
Immediately following the Great Recession, the U.S. was the first to begin a recovery, albeit at a pace well below that of historical recoveries. The recoveries of many non-US economies lagged behind that of the U.S. by three to four years. In our minds, this may be a reason why the U.S. recovery has been so anemic (ex.: think demand). Now that those economies are growing too, there’s hope the U.S. economy will continue to gain momentum and push this expansion even farther.
By most measures, the U.S. economy appears quite healthy at the moment, and at present, there are few early warning signs of an impending recession.
As a result, ICMC believes the outlook for another year of economic growth, at the moment, is quite favorable. However, there are two important caveats to mention:
- With unemployment at 4.1% versus its long-term average of 5.79%, wage pressures could accelerate, resulting in higher levels of inflation than expected
- A new Federal Reserve Board could accelerate the pace of increases in interest rates
These factors, if realized, could cause heartburn for the economy and for investors.
A Good Time to Review Your Portfolio
Despite the good economic times, we’ve still witnessed high volatility in the traditional markets this year. This is an opportune time for you to review your portfolio with your wealth manager and ensure that you and your family are prepared and protected against the next downturn. Because it’s not a matter of “if” but rather “when” the next one will occur.
A few tips:
- You need to evaluate (or re-evaluate) your risk tolerance—how much investment risk are you willing to take on at this point in your life?
- Then meet with your wealth manager to either set goals or evaluate your current ones.
- Also, work with them to determine if you need to make any strategic changes to your portfolio—for example, are alternative investments that don’t correlate with the traditional stock and bond markets a good option for you to protect your portfolio?
If you have questions about the economy or your current situation, then contact us today.