The U.S. economy enjoyed a fairly healthy 2016. Mortgage, interest and unemployment rates remained near record lows. So what’s in store for next year? Will we see more of the same or should we anticipate change in the New Year?
The good news, forecasters say, is that overall the economy is expected to be slightly stronger in 2017. Here’s an overview of key economic indicators to keep an eye on in the New Year — and how they might impact your wallet.
The job market is expected to tighten next year as demand for skilled workers continues to exceed availability. Unemployment is anticipated to remain low and even decline slightly. And as the labor market tightens, wages should rise faster in 2017 than they did in 2016.
“Our economy is driven by consumers,” explains Jeffrey Korzenik, chief investment strategist at Fifth Third Bank, who adds the most important indicator of a healthy economy is job growth.
What it means for you: Good news overall if you’re job hunting or hoping for a raise.
2. Interest rates
Look for interest rates to increase gradually and stay there.
What it means for you: “If interest rates rise, consumers might want to consider locking in rates now and work toward reducing debt,” says Korzenik. For instance, switch your mortgage from an adjustable rate mortgage (ARM) to a fixed rate, refinance or apply for a fixed-rate loan sooner rather than later.
Low mortgage and unemployment rates will continue to drive demand for housing. However, a lower inventory of new homes is keeping home prices high. Lower home inventory also means rents will remain high.
What it means for you: Good news if you’re selling. But, it could be challenging if you’re trying to buy. Korzenik encourages consumers to be ahead of the curve. “If buying makes sense for you, it certainly is not too late.”
Be Prepared for Any Reality
Focus on paying down debts, building an emergency fund that’s easily accessible, and continuing to save for retirement and other goals. Then you can feel confident knowing you have a solid financial plan in place — in any economy.
“The most important thing to do is to have a plan and stick to it,” says Korzenik, who adds the biggest mistake investors tend to make is panicking. “Try to avoid getting caught up in the latest news cycle. But do pay attention to what goes on in a new administration. There may be policy changes that could impact your finances.”
If you have questions or concerns, contact a Fifth Third Bank financial advisor to review your plans and goals, and help you understand all your options.