The economic recovery is winding down. A president entrenched in the business world is readying to take office. The Federal Reserve stands at the brink of raising interest rates for the first time this year.
A lot could, and likely will, change for the U.S. over the next few months.
Here are the predictions some economic leaders, who spoke this month at local events, have going into the new year:
1. Donald Trump won’t cause a recession.
The stock market might have flinched the night Donald Trump was elected, but it sure does love the GOP sweep in the House and Senate.
If Trump and his Republican colleagues follow through on a pro-growth agenda, the U.S. might not see another economic recession until 2019, said Linda Duessel, a senior equity strategist with Federated Investors, a Pittsburgh-based financial services company. She spoke at last week’s Lancaster County Chamber of Commerce Economic Forecast Breakfast.
But that doesn’t mean anyone should expect exponential growth either.
“People are always wanting to be overly excited,” she said.
Trump is coming into office late into what could turn out to be one of the longest economic recoveries in modern history – albeit not a particularly strong one. He will also face, among other challenges, growing debt as the baby boomers age and strain on entitlement programs grows.
The result: a mild recession to follow this weak recovery – or, as Duessel described it, “warm milk and cold toast.”
2. Professionals will need to remain vigilant about scams. And they need to make sure their customers understand their products.
State finance regulators kept a close eye on financial scams in 2016, and they expect to see more of the same in the coming year, Pennsylvania Secretary of Banking and Securities Robin Wiessmann said at a press conference last week.
So how can the business community do its part to help?
The state offers several programs to help professionals recognize when elderly clients stand at risk of financial exploitation. Offerings from the Elder Investment Fraud and Financial Exploitation Protection and the Senior $afe programs specifically educate people from the health care, legal, investment and, as of this month, accounting professions.
Financial professionals also need to make sure clients understand their services. Most of the complaints the banking department received in 2015 resulted not from actual scams or wrongdoing but confusion about the terms of a particular product, according to a recently released report from the department’s Financial Services for Consumers and Business.
These kinds of issues underline the need for financial professionals to spend in-person time with their clients, even in an age when everything could happen online, Wiessmann said.
Discussion today included initiatives to protect elderly and online consumers. The dept is part of several awareness campaigns. pic.twitter.com/SHOU6ua43h
— Jennifer Wentz (@jenni_wentz) December 8, 2016
3. Regulation will decrease – but no one’s sure what that will look like.
Anyone who paid any attention to the news this year might have already wearied of hearing this oft-recited refrain of Trump’s campaign. But the people who keep an eye on the state and national economy are still talking about it, so it bears repeating:
Trump wants to roll back regulations. And doing so would likely mean economic growth.
The small business optimism index – a monthly survey conducted by a national business advocacy group – has shown that small businesses have generally been in a pretty bad mood in recent years, Duessel said.
Their top concerns: taxes and regulations.
With Trump vowing to scale back both, these small businesses, which employ about 70 percent of the U.S. population, are getting a lot happier, Duessel said. And happy businesses spend money. And spending pushes back that ever-looming recession.
As far as what regulatory reform could actually look like under Trump, no one really knows. He’s unlikely to completely repeal monolithic programs like Dodd-Frank, and, Duessel noted, he has said next to nothing about possible reforms to difficult-to-change environmental regulations.
Wiessmann is adopting a wait-and-see approach to determine what new roles her department could take on if Trump significantly weakens federal banking regulations.
Her department, she said, is going to just continue doing its part to protect consumers at the state level.
4. The economy will love millenials.
“My most bullish word for the future of our country is millennials. Love the millennials,” Duessel said.
Employers right now largely have more job openings than they can fill. And millennials – 115 million people born between 1980 and 2004 – are one of the most well-educated, tech-savvy groups to move through the economy, she said.
These millennials – 26-year-olds specifically – make up the largest age group in the country right now, and they’re right around the age to not only start filling jobs but also buy their first homes and potentially have children – all signs that bode well for the economy, Duessel said.