With the economic downturn in the tail-end of 2018, many investors are trying to figure out what exactly the market has planned for them in 2019. Up until its last quarter, 2018 was a year of unprecedented prosperity, hauling the Dow-Jones to dizzying new heights. Yet the last quarter brought a huge market contraction, plunging stocks and eating up much of the progress of the past year. In other words, 2019 is a big question mark.
The professionals at Harvest Financial Planning, LLC, are here to help you navigate this unpredictable market. We search high and low to find the best financial information available, and we can help you use research to make more informed decisions with your assets.
One new resource, Outlook 2019, created by LPL Research and available in full here, offers an in-depth look at the state of the market going into 2019. New investors may find it helpful in understanding the current market conditions, and even experienced investors will discover some intriguing research. Here are some of the highlights from their analysis.
According to LPL, cautious optimism will be the ruling sentiment of 2019. The contraction, while abrupt, is mostly the market correcting for its intense growth the rest of the year, and is no reason to panic. There are a few factors to pay close attention to when predicting the general health of the market, though, and many of these seem to be stabilizing for healthy growth in 2019.
Politics and Policy
Legislation, policy and political factors play a significant role in shaping the economy. After a turbulent two years following the administration transition, both economic policy and the political environment seem to be gaining stability. The current political gridlock is expected to continue in the near future, which actually contributes to better market stability. How the partial government shutdown will impact economic prospects is not yet clear.
Policy has generally shifted to foster business growth, the cost of which has added to the government deficit. While the economic growth of the past year has not reached the level needed to shrink the deficit, it is close, and 2019 could see us break the high-water mark on it.
General trends you should follow include business spending, unemployment and – of course – GDP growth. The macro factors point to more of the same stable growth predicted by policy. GDP grew at a higher rate over 2018 than 2017, and seems primed for a slower, steadier growth throughout 2019. With it, inflation also increased moderately and is likely to rise more by the end of 2019, likely sticking close to the growth over 2018. Unemployment dropped to a low point over 2018 and may have bottomed out for the next year, stymying further economic growth.
Overall, business spending exceeded predictions in 2018, a pattern which may continue for 2019, as wages improve and unemployment falls off. The current policy structure is conducive to business spending, so it is likely this trend will continue.
One of the most significant concerns going into 2019 will be world trade. Economic slowdowns persist for many of our closest trade allies, and the trade war with China is contributing to an economic slowdown in certain sectors. However, China has shown a willingness to pursue aggressive policies to boost economic growth in the past, and reasonable recovery is likely on their end.
The Guidance You Need in a Changing Market
As LPL Research states, this bull market is the longest in US history, a fact likely to inspire confidence in most investors. Overall, faith in the market results in a strong market, a familiar paradox for any seasoned investor. Whether you are new to investing, or an experienced investor looking for a new strategy, Harvest Financial Planning, LLC, can provide you with industry insights and analysis customized to your unique situation. From business valuation services to private wealth management, we assist businesses and individuals in planning ahead for a bright economic future. Begin working with our team today by calling our office or completing the online contact form.