The fourth quarter has been hectic for equity, fixed income and energy markets. On any volatile day, market observers look for a root cause. We have seen both blame and praise placed on Federal Reserve commentary, presidential tweets and trade proclamations. The signals are getting harder to separate from the noise.

Amid all this, the economy remains fundamentally sound. Growth continues, employment is still strong and wages are rising. Consumers are confident and enjoying a momentary gain from lower oil prices, supporting holiday spending. As the year reaches its end, we look back on a year of outsized growth and anticipate a reversion to more typical cyclical progressions.

Key Economic Indicators

Influences on the Forecast
    • The unemployment rate has held at a very low rate of 3.7% for three consecutive months. Job growth continues, but in a more moderate way: the November payroll gain of 155,000 jobs was slightly slower than anticipated, and was accompanied by downward revisions to past months. The labor force has had sufficient slack to provide workers on the margin to fill newly created jobs.