Mullaney Keating & Wright

Independent Investment Professionals

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LEAN YEARS AHEAD

The Congressional Budget Office just released An Update to the Economic Outlook: 2018 to 2028.  The full 24 page report is sleep inducing but the 5 page Economic Outlook Update Summary is well worth some study.  The CBO projects that real GDP will taper off from a projected 3.1% for this year to just shy of  1.7% for the years out to 2028.  The principal reasons (page 3, bottom panel) are anemic labor force growth (pretty much baked in the cake) and unimpressive productivity growth (a more uncertain projection).

This is important because equity returns are highly correlated with nominal GDP growth as are fixed income returns.

TFM