2017 looks set to be an interesting time for markets. Predictions range from leading economists foreseeing a major stock market crash to a rosy forecast from Forbes predicting that 2017 will be better than 2016. This highlights the uncertainty currently governing global markets. The election of Trump makes it even more difficult to forecast what will happen.
Prior to the election, analysts predicted a massive fall in the stock market and global economic turmoil should Trump be elected, but this failed to materialize. Suddenly, it seemed the same doom prophets were predicting a stronger future thanks to a “business friendly” president. However, Trump’s economic policy remains a matter for speculation. There have been some hints, but there is still no certainty. The mercurial Trump is somewhat inclined to change his mind, so nobody really knows what his policies will ultimately look like.
As a result, we’re going to give you the full mixed bag of predictions, contradictory though they might seem, and leave it up to you to decide which scenarios are the most likely.
1. Stock market crash 2017?
Several extremely prominent economists say that the US stock market is ridiculously overvalued, and even the Royal Bank of Scotland says the warning signs are there. Economists say they are seeing the same warning signs that showed up in 1929 prior to the great depression and in 1999 prior to the global economic melt-down.
2. Forbes predicts a good 2017
On the flipside of opinion, Forbes has published an article predicting wage growth and improved consumer confidence. Its analyst says that after looking at four major indicators, he concludes that there will be modest growth in the economy during 2017.
3. Slight stock market drop plus economic growth
Fortune is among the publications that acknowledge the uncertainty that faces markets, however, it is willing to try its hand at a few predictions. Among these: a 3 percent drop in the stock market by the end of 2017, and 2 percent plus economic growth.
4. Oil price to rise
Oil producers are taking strain at current prices, and recent agreements to limit production are likely to pump up the price of crude. That means that your SUV is going to get less economical to drive, and we can expect some inflation since transport forms part of the cost of everything we buy. Of all our predictions so far, this one seems the closest to an absolute cert.
5. Strong property markets will boost construction
According to Fortune, a growing demand for housing has not been met with the construction of new residential properties. It suggests that 2017 will be the year when we’ll see new homes and condo construction on the rise once again.
6. Euro to strengthen while British pound falls
When British Prime Minister Theresa May triggers Article 50, the British currency is expected to take the strain. The EU is expected to take a hard line with the UK, making Brexit costly and difficult. This, in turn, will strengthen its position and confidence in the EU as an economic force to be reckoned with.
7. Millennials will boost economic growth
The average millennial in the US is now 26 years old, and better educated than ever before. With companies baying for talent, these young people will be sought after in the job market, and they are the right age to start buying homes and having kids. This could help give the US and global economy a shot in the arm.
8. US interest rates expected to rise by 1 percent
We’re ready to put money on this prediction too. Interest rates have been kept artificially low, and the position is not sustainable. With a strengthening economy, the Fed is expected to raise interest rates by at least one percentage point during 2017. Although this might seem like bad news, it absolutely has to happen if we want to stave off yet another economic crisis.
9. Globally mediocre performance
In its 2017 predictions, The Guardian treads a middle road. It concludes that we can expect “mediocre” performance in US and UK, and warns that debt burdens are harming economic growth. It warns of debt crises in emerging markets that will ultimately effect developed ones. While falling short of predicting a new economic crisis, it warns that there are dangers to navigate.
10. No spectacular gains
Although worst case scenario predictions seem unlikely to be realized, we should not expect spectacular gains during 2017, warns Bitcoin News. It recommends the diversification of investment portfolios to limit risk – a non-revolutionary statement that has always been part of a sound investment strategy. Thus: mediocre advice for a mediocre year.
What does this mean to you?
On the whole, 2017 predictions don’t imply any major changes for those interested in sound financial management. The basic lessons remain the same: reduce debt, build savings and invest with caution. But you already knew that…
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