by Kyle S. Plotkin
Investment Advisor Representative
[email protected]
So here we are in this weird week between Christmas and New Year’s, when days start blending together and “business as usual” is on a hiatus until the new year starts. It’s a good week to sit back and evaluate where the economy has been and where things may be headed. As you may have guessed, this is a big topic of discussion these days, both within the office and amongst our clients.
One of things that all of the Franklin Retirement advisors, myself included, have noticed since the election is the wide disparity of opinions about what is likely to happen in the coming weeks and months. Some of you have expressed very positive sentiment that the incoming administration is set to quickly fix things in the economy and growth will continue in a big way moving forward. Others have expressed negative views with a very pessimistic outlook for what may happen after January 20th.
Personally, I always pay attention to what the “professionals” are saying. There have been times in the past when the sentiment is nearly unanimous amongst the so-called analysts and experts. One example that comes to mind is the beginning of 2023, when the vast majority of market outlooks called for caution and warned of a continuation of the market slide we experienced throughout 2022. Most of the prominent voices were urging caution and many investors worked to reduce the risk in their portfolios. How did that work out? All three major indexes went up double-digits for the year, with the S&P 500 up 24% and the tech-heavy Nasdaq increasing more than 40%.
That brings us to the current moment. The wide variance of market outlooks can largely be tied to the political leanings of the individual. A recent piece on Yahoo Finance (read here) went into the numbers. According to the University of Michigan’s Consumer Sentiment Index, feelings amongst self-identified Republican consumers jumped to their HIGHEST level since November 2020. At the same time, readings amongst self-identified Democrats hit their LOWEST level since September 2020.
Consumer sentiment may be largely “vibes-based”, but the topic of inflation should have some more agreement, right? Wrong. The article quoted Survey of Consumer director Joanne Hsu: “Throughout this month’s interviews, Democrats voiced concerns that anticipated policy changes, particularly tariff hikes, would lead to a resurgence in inflation. Republicans disagreed; they expect the next president will usher in an immense slowdown in inflation.”
Pretty wild stuff. So what is the takeaway here? First, I wonder if we’re all too caught up in our own bubbles. Turn on the TV and see cable news screaming that everything is bad and the sky is about to fall and set us all on fire. Change the channel and the rivers are about to flow with liquid gold and your crypto shares will be worth billions tomorrow. Maybe we should all take a step back. Will things change? Of course, they always do. But maybe… just maybe… if you zoom out to the big picture, you arrive at “the more things change, the more they stay the same”.
Your alarm clock will still go off in the morning. Corporations will still work to increase shareholder value, regardless of what happens in Washington. We’ll still hate paying taxes, and the government will still spend more than they collect. The price of things will still go up. The ball will stop drop in Times Square on New Year’s and the Super Bowl will still have the best commercials. Life will go on. Your favorite news channel will still have opinions, and you’ll still tune in to validate your hopes and fears.
Maybe the best course of action is to wait and see. Nothing is ever as good or as bad as it seems. Policies will change, and those changes will take months or years to have any real effect. By the time that happens, we’ll be fighting over the midterm elections and time will keep moving on.
From all of us here at Franklin, we hope you’ve had a wonderful holiday season and an even better 2025. Happy New Year!