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Bob Doll Checks In on His 10 Predictions for 2018

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As the first half draws to a close, Nuveen weighed in this week with its outlook for the July-to-December period. In brief:

  • Nuveen expects U.S. economic growth to accelerate and inflation to continue to move modestly higher.
  • Before equity markets can break out of their trading ranges, headwinds such as mounting trade issues need to ease.
  • Equities will outperform bonds this year, with volatility remaining relatively elevated.

“Our overall theme for the year has been that we expect 2018 to be ‘less perfect’ than 2017, as we see continued decent economic growth and corporate earnings, as well as low but rising inflation and yields,” Bob Doll, Nuveen’s senior portfolio manager and chief equity strategist, wrote in a recent commentary.

“At the halfway point of 2018, the year is mostly shaping us as we expected.”

At the beginning of the year, Doll made 10 predictions for the markets in 2018. He took a look at how those predictions are shaping up so far. Overall, he scored seven as “heading in the right direction” and three as “too early to call”:

Prediction 1: U.S. real GDP reaches 3% and nominal GDP 5% for the first time in over a decade.

Nuveen expects economic growth to rebound after coming in at a relatively slow 2.2% in the first quarter, and accelerate past 3%, thanks especially to the robust labor market, a boost from additional fiscal stimulus and rising capital expenditures. With inflation climbing modestly, nominal GDP growth should climb to 5% for the first time in more than a decade.

Scorecard: Heading in the right direction

Prediction 2: Despite ongoing protectionism, the global expansion continues with the fewest countries in recession in history.

Despite increased threats from trade protectionism in recent weeks, the global economy has been able to look past these issues so far. The overall world economy is in excellent shape, and Nuveen predicts the expansion will continue, even as growth in some regions may be slowing.

Scorecard: Heading in the right direction

Prediction 3: Unemployment falls to the lowest level in nearly 50 years as wage growth is the highest since the Great Recession.

As Nuveen predicted, U.S. unemployment fell to its lowest rate in 50 years, 3.9%, according to the Bureau of Labor Statistics. Nuveen also predicted that wage growth, which has inched upward from 2.5% to 2.7% this year, would reach 3% by year-end.

Scorecard: Heading in the right direction

Check out the rest of the list here.

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