The strength of the U.S. economy cannot be denied, says Brad McMillan, chief investment officer at Commonwealth Financial Network, an independent broker-dealer.
Despite looming international crises in North Korea, Iran and elsewhere, the United States is relatively stable with all indicators pointing to a continuance of a good economy, he adds.
“The economy is hitting on all cylinders and is not reacting to world events,” McMillan said during an interview at the Financial Planning Association Annual Conference in Nashville.
Although devastating to residents, the three huge hurricanes that have hit the United States will prompt massive investments in the building trade, construction and employment. But factors beyond that also are looking favorable.
“Job growth is slowing but is still positive, and will continue for another 12 to 24 months,” he says. Consumer confidence has picked up recently and will continue for 18 to 24 months, unless something drastic happens with North Korea.
Business confidence also slid down for a bit but has popped back up.
McMillan says all of the names being put forth as possible Federal Reserve chairs to replace Janet Yellen, whose term expires in February, are more “hawkish,” and more likely to continue raising interest rates at a faster rate than she would have done.
In the meantime, advisors should keep their eyes on all of these events and potential changes in trends. The strong economy could continue for a number of years yet, but on the other hand, something could happen to change the prospects.
“Even for advisors who use buy-and-hold practices for their clients, they should tell clients they are prepared for whatever might come," McMillan said. “Then the clients won’t panic when the economy takes a downturn. The client will know you, as an advisor, know what you are doing and they will be willing to follow your lead. You need to think the unthinkable before it happens.”