Can you believe 2017 is in the rear view mirror? It went by quickly, but there were many impactful stories from around the world.
This past year was again friendly to the investment markets as most major asset classes had positive returns. The US economy is now in its ninth year of expansion and appears to be relatively healthy, despite the recent string of hurricanes. We see that job creation and the housing market are strong, and wealth is above its pre-crisis peak. However, that increase in wealth has not been distributed evenly across the classes, which was a major issue in 2017, and one we anticipate to continue into 2018.
The disparity in income and wealth growth is one contributing factor to populism and anti-globalization. These movements that promote nationalism tend to weaken international trade and therefore cause an economic drag. These ideas were present in the US and UK political scene and created a pullback in US global leadership. We've watched China and Russia make moves into this role, which is worth keeping an eye on, particularly as North Korea makes strides in their nuclear program.
The tax overhaul that came at the end of 2017 is another major item to consider into 2018. The implications for individuals is complicated and will vary substantially from one person to the next. In terms of the impact on the economy, however, we have our suspicions. An estimate from the Joint Committee on Taxation projects that the plan will add $1 trillion to public debt over the next ten years without much expected in the ways of economic growth. Growth in US debt is manageable at low interest rates, but will be a major pain point when interest rates rise.
Whatever the year brings for the markets, we hope 2018 is a great year for you and your loved ones. Cheers to 2018!