In the investment community, all eyes are on inflation this year. Economic analysts at Merrill Lynch anticipate further tightening in the labor market, to the tune of 3.9 percent unemployment by the end of 2018. Along with the tightened labor situation, they also expect personal consumption expenditure (PCE) inflation rising to 1.8 percent by year end and 2.0 percent by the end of 2019.1
As of this writing, inflation is at 1.7 percent. There is speculation that new Federal Reserve Chairman Jerome Powell may be open to inflation flowing as high as 2.5 percent before making any dramatic moves in interest rates, in an effort to extend the more than eight-year expansion in U.S. growth.2
It’s been a very good run for U.S. investors, but there are indicators that we could see more volatility this year. As such, individuals approaching retirement may want to consider ways to help reduce the impact of market volatility on their retirement assets. We’re happy to review your current situation and recommend strategies using a variety of investment and insurance products to help you pursue your long-term goals; just give us a call.
Below are some investment trends we see for 2018:
Growth stocks have been outperforming value stocks for quite some time, but it looks as if that could change. Stocks that are considered undervalued have high relative dividend yields, low price-to-book ratios and/or low price-to-earnings ratios. These stocks offer the opportunity to thrive in a somewhat volatile market.3
Much like their baby boomer parents, millennials are expected to drive innovation and previously under-explored markets in the future. As a demographic, they are tech savvy, environmentally aware and focused on sustainability, clean energy and impact investing. Perhaps more significantly, this generation is projected to inherit nearly $4 trillion in the United Kingdom and North America alone, which means they may have the means to act on their well-cultivated interests and passions.4
Transportation continues to be an issue in America, and we could be looking at a future ripe with automated cars, buses and other vehicles that do not require drivers. Public agencies may do well to focus on long-term city development plans that can accommodate driverless cars and other innovations.5
You may think that Amazon’s recent acquisition of Whole Foods has heralded a new era of buying groceries online. However, it’s a trend that has been going on for years, driven by investment by brick-and-mortar retailers, with online grocery shopper numbers more than doubling in a little over a year. According to recent research from the Food Marketing Institute (FMI) and Nielsen, almost 50 percent of Americans purchased groceries online in the past three months. The trend, however, is dominated by younger adults: millennials at 61 percent and generation X at 55 percent. FMI and Nielsen predict that many as 70 percent of U.S. shoppers could be buying groceries online by 2022.6