12/23/2016
Your Financial Plan and the 2017 Economic Forecast

Your Financial Plan and the 2017 Economic Forecast

Among those confident about the U.S. economy in 2017? The Federal Reserve. During the announcement that the federal-funds target rate would be raised by a quarter percentage point, to between 0.50% and 0.75%, Fed Chairwoman Janet Yellen stated, “Our decision to raise rates should certainly be understood as a reflection of the confidence we have in the progress the economy has made.” The expectation is that Fed officials will raise rates next year by another 0.75 percentage point, most likely by a quarter point at a time. Yellen, who was appointed by President Obama, has two years left on her four-year term.

The Trump Rally
Following the election, the Dow Jones Industrial Average broke an all-time high, passing 19,000 and approaching 20,000. Stocks surged on promises of loosening regulation, lower taxes and a $1 trillion stimulus for infrastructure spending. But despite the so-called “Trump rally” – which saw a sudden explosion in financial, health care and industrial company stock prices – many are expressing cautious optimism about the stock market in 2017.

Are Investors Getting Greedy?
Though few following the election are warning about President Trump “derailing the economy,” there is concern that the Trump rally pushed the Fed to raise rates even though the growth from stimulative policies hasn’t actually occurred yet. The Fear & Greed Index created by CNNMoney, which measures 7 separate gauges of investor sentiment has registered “Greed” and “Extreme Greed” since the election – a stark contrast to the “Extreme Fear” readings just before the election. It’s worth remembering that we were already in a Bull Market in 2016, with the Dow Jones moving from just below 16,000 in January to just below 20,000 in December. And it’s also worth remembering the iconic Warren Buffet quote, “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful.”

Looking Ahead: 2017 and Your Financial Plan
As always, we advise that investors work with a qualified financial planner and stick to a consistent investment strategy regardless of swings in the market. OptiFour Integrated Wealth Management’s team of dedicated financial professionals has provided financial evaluation, financial planning, and implementation in Washington, D.C. for over 25 years. Visit our homepage to learn more about our personalized services:

  • Financial Planning
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