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Economic commentary

January Economic Review: Accommodative monetary policy and less geopolitical risk suggest continued growth ahead – but Iran poses a new risk

Modest inflation and a still solid job market have created a benign environment for consumers. The misery index has fallen substantially since its 1980 highs and today it is well below average. But manufacturing remains in a funk and the Iranian crisis may offset other reductions in geopolitical risk. The year ahead presents reason for both optimism and caution. While the risks that pushed the Fed to cut benchmark interest rates three times in 2019 have yet to completely dissipate, they did downshift enough in the latter stages of the year to suggest that the expansion is still not close to an end. See Nationwide Economics’ take on what's happening and why this month in the economy. 

Economic commentary

Strong end to 2019 for equity markets

Financial markets ended a banner year positively with the S&P 500 stock index up by nearly 3.0 percent in December. Positive geopolitical news (including the phase one trade deal with China and reduced odds of a hard Brexit) and further expansion of the Federal Reserve’s balance sheet to keep liquidity plentiful at the end of the year helped to boost equity markets. For the year, the S&P 500 index climbed by 28.8 percent — its strongest year since 2013. Aside from brief pullbacks in May and August, the market gains were consistent throughout the year — with a closing low on January 3 and a closing high on December 27. Even after accounting for the steep market decline in the fourth quarter of 2018, the S&P 500 index ended 2019 more than 10 percent higher than the peak level from 2018.