- Over the next few months, decisions made in Washington will play an outsized role in the outlook for financial markets and the U.S. economy. On Capitol Hill, the House-Senate budget conference committee is in negotiations on a deal to fund the government and reduce automatic spending cuts. A few blocks away, the Federal Reserve is in the midst of deciding the future of its quantitative easing program.
- The budget committee must present recommendations to Congress by December 13th. In a best case scenario, the negotiations will reduce sequestration, which will otherwise slow economic growth by 0.6 percentage points in 2014.
- The Federal Reserve is likely to begin tapering asset purchases in the New Year. Once tapering begins, the Fed’s goal will be avoiding a back-up in interest rates. This is likely to require a more direct signal that short term rates will stay on hold even longer than current expectations.
Source: TD Economics
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John P. Chladek, MBA, CFP® is the President of Chladek Wealth Management, LLC, a fee-only financial planning and investment management firm located in Leawood, KS, a suburb of Kansas City near Overland Park. For more information, visit https://www.chladekwealth.com.