Augusta, Ga. (WJBF) – As tax season comes to an end, and so many are focused on their wallets, The Means Report welcomes back Jeff Fehrman, the president of the Fehrman Investment Group. He delves into the impact politics have played in the economy and what the expectations are for the stock market.
It has been an exciting year in politics and the world economy. What are some of your concerns looking forward for this year? Political uncertainty can provide some instability, but also some opportunities for growth in the US economy. A Federal Reserve misstep can always cause economic instability. A few areas that could prove helpful to the markets and the overall economy include European growth, corporate earnings growth, tax reform, and a continued low interest rate environment.
Let start with the big picture. Do you think the US Economy will continue on a growth path? Yes we believe that we will continue to see increases in Gross Domestic Product in 2017 and 2018. Full employment and less regulation should continue to fuel growth in the U.S. The good news is that the political partisanship has little control for rolling back regulations and aiding business expansion.
You mentioned political uncertainty. What are the possible effects of politics on the economy? The market has performed well since the Trump election for several reasons, but certainly the potential repeal of ACA, tax reform, and less regulation has prompted this growth. One risk is the partisanship we saw with the repeal of ACA failing. If this continues it could influence that markets if tax reform and infrastructure spending are not passed.
We have seen a small interest rate increase, what do you think we will see for the balance of this year? We believe we will continue to see a low interest rate environment relative to historical norm. This will remain accommodative to the economy. We will continue to see rates creep upward, but at a fairly slow pace. So do not expect high rates on your CD’s or banks money markets any time soon.
We have talked about the US, but what is occurring in the rest of the world? It looks like the slow growth for most of the rest of the world has turned the corner. Obviously this varies by region, but the world GDP seems to be picking up and should help GDP in the US as well.
So what are your expectation for growth in the Stock market? We believe the market will continue to have some volatility this year, but trade up another 3-5% before year end. Corporate earnings continue to be a positive for the markets, especially compared to a marginal second quarter last year. A surprise success for tax reform or ACA repeal could have a great positive effect, conversely continued political failures could negatively impact the markets.
If you would like more information about any of the areas discussed, or about your own financial planning, please feel free to contact the Fehrman Investment Group via their website or by calling 706-922-3590.