1Q18 GDP Expectations Get Reduced
One of the things we do for our small business owner clients is conduct risk management by tying what's going on in the economy to everyday business decisions. We have been advising our clients to manage their business using more risk aversion to reflect our concerns over rising interest rates and the length of the economic cycle. As reminder a business owners income is from the business they own thus this should carry thru to an owners personal lives as well.
Thus why I thought it was useful to pass along that the Atlanta Federal Reserve reduced its 1Q18 GDP forecast for the growth of the US economy to 1.9% well below its initial forecast of 5.4%. The reason for the reduced expectations maybe tied to the recent rise in long-term Treasury rates which has dampened economic growth (housing to name one segment). Many are surprised by this given the very high level of business sentiment readings recently. Our long standing view has been that tax cuts would not come free and would result in higher rates that would offset some of the benefits. That is exactly in our view what is occurring.
Contact us to discuss the specifics on how to risk manage your business and align it with the business cycle.