Old National Wealth Management 2018 Economic Outlook

Old National Wealth Management 2018 Economic Outlook


– Hi, I’m Matt Finn, Chief Economist and Director of Portfolio Management for Old National Wealth Management. Our 2018 economic and market outlook remains focused on the
key drivers in the economy that have carried us this far. While there are always surprises and unexpected developments,
the fundamental trends of low unemployment, perhaps
three point seven next year and three and a half percent in 2019, coupled with modest inflation, probably to no more than
two, two and a half percent next year, thanks to a federal reserve monetary policy that will keep the economy from overheating with three to four rate increases next year. Although we didn’t see it in 2017, we believe further tightening
in the labor market will push wages up, as a result consumer confidence will remain elevated. Happy and optimistic
consumers tend to spend more, pushing retail sales higher. From a global perspective,
virtually all of the world’s major economies are expanding
and none are forecasted to go into a recession for 2018. Rising interest rates in
the U.S. will keep upward pressure on the value of the U.S. dollar but growing GDP in other countries will support the value of
their currencies as well still making U.S. good
affordable and thus keeping demand for U.S. goods and
services at a sustainable pace. As far as the stock market goes, we think the theme for next
year is diversification. You’re going to need it. It’s been very difficult to
stay broadly diversified lately because almost every other asset class has underperformed large cap U.S. stocks. But when you look at a longer term trend, large cap stocks like
those in the S and P 500 are rarely the top performing asset class compared to small cap stocks,
emerging market stocks, real estate and even sometimes bonds. Now it’s impossible to
predict which one of those will be on top from year to year but that’s why we stress
a diversified approach. What we do know is that
U.S. stock returns have been significantly above
their long-term average for quite some time. We don’t know how much
longer that can be sustained but sooner or later,
U.S. stock returns will experience a mean reversion and when they do, diversification will be the key to superior returns. As always, please reach
out to your nearest Wealth Management office
if you have any questions or click on the link below to be directed to one of our investment professionals.

Leave a Reply

Your email address will not be published. Required fields are marked *