Will economic growth continue in 2018? When will this stock market bull run put on the brakes? And what may a new Federal Reserve chair bring to the mix?
You have questions, and PNC’s economic and investment experts have insights.
The current U.S. economic expansion may break the record for longest-ever, as it enters its ninth year in 2018. “It may be old in years, but it’s young at heart with a lot of life left,” said Stuart Hoffman, PNC’s senior economic advisor.
He offered six reasons why “the economy has legs:”
“We expect faster economic growth and the unemployment rate to fall to under 4 percent next year,” he said. “Indeed, for the next couple of years, the U.S. economy has a lot more going for it than not.”
Robust stock market returns were the norm this year. In fact, the S&P 500 is up 17 percent from the start of 2017. And that’s been the story across the globe, too.
“Investors haven’t had a reason to get nervous this year,” said Wealth Management Chief Investment Strategist Bill Stone. “We’ve gone much longer than normal without even a 5 percent decline in the stock market.”
That’s because extremely low 10-year Treasury bond yields have supported stock-buying, global economic growth has tamped down market swings, and corporate earnings – which go hand-in-hand with stock prices -- are up nearly 10 percent.
But history tells us that a low-volatility year typically doesn’t repeat itself the next year. “It makes a good argument that we should expect more volatility in 2018,” Stone said. “But a very large downturn in the market doesn’t seem likely any time soon, given the low risk of recession in our view.”
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