Investing can feel like a rollercoaster, especially when economic news and speculation about the state of the economy shift. Our advice? Stay disciplined—stick to your long-term plan and don’t let short-term noise throw you off. We’re watching the markets closely, analyzing the latest data, and adjusting our outlook, and rebalancing the portfolio as needed. If you’ve got questions or want to talk about your portfolio, don’t hesitate to reach out. Now, here’s our updated take on where the economy might be headed this year: "Soft Landing" (Our Main Prediction) What it means: The economy slows down but doesn’t crash—growth stays steady, jobs hold up, and inflation calms down. Odds dropped a bit: From 55% to 50%. Details: Growth should stay near the usual 2-2.5% (adjusted for inflation). Jobs market is stable, not growing or shrinking much. Inflation is cooling off, but more slowly lately.
What the Fed thinks: The Federal Reserve (the folks who set interest rates) now see more risk of inflation going up than jobs going down. They might be worried about future government spending plans (like Trump’s policies).
Our take: Inflation isn’t a big worry yet, and jobs are steady. If jobs weaken a lot, the Fed could cut rates faster to help—but they’re focused on inflation now, so they might not act quick enough. That’s why we lowered the "soft landing" odds a little.
"Growth Scare" What it means: The economy slows more than expected, and people panic about a possible recession. Odds went up: From 25% to 30%. Details: Recent data shows growth cooling off a bit since mid-November. But it’s cooling from really high levels, so it’s not a disaster yet. Markets often overreact and might call this a recession too soon.
Why it’s more likely:
"Reflation" What it means: Inflation picks up a bit while growth stays decent—think Trump policies or a bumpier road to normal inflation. Odds stayed the same: 15%. Details: Our take: We don’t think Trump’s wildest plans will happen. Recent inflation spikes (like in used cars or airfares) aren’t widespread or long-lasting. Rent prices (a big chunk of inflation) are slowing down, with more relief coming.
Why it’s not a big worry: Jobs and wages are balanced, not fueling big price jumps. Businesses are producing more with less (higher productivity), keeping costs down. So, reflation could happen, but it’s not super likely.
"Stagflation" What it means: Inflation shoots up and growth slows—a tough spot where the Fed might keep rates high, risking a recession. Odds are still low: Not a big focus (exact % not given, but it’s small). What could cause it: Our take: This is a long shot for now.
Bottom Line: Most likely (50%): A "soft landing"—economy slows but stays okay. Watch out for (30%): A "growth scare"—things cool too much, and people freak out. Less likely (15%): "Reflation"—inflation ticks up but doesn’t spiral. Rare chance: "Stagflation"—a messy mix of high inflation and slow growth.
Rigden Capital Strategies is a fee-only fiduciary firm providing personalized wealth management and financial planning services. We prioritize our clients' financial well-being by crafting tailored strategies that align with their unique goals. Our approach integrates active and passive investment management, tax-efficient strategies, and ongoing financial planning to help clients navigate their financial future with confidence. Disclosure: This content is for informational and educational purposes only and should not be interpreted as financial, legal, or tax advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information provided. Investment decisions should be based on individual circumstances, and we recommend consulting a qualified professional before implementing any financial, legal, or tax strategies. Past performance is not indicative of future results, and all investments carry risks, including potential loss of principal. |
