I joined the Financial Association of Maryland for a meeting at the Baltimore Office of the Federal Reserve on January 17th, 2018. Andy Bauer, Senior Regional Economist, presented a favorable economic outlook for 2018. Inflation pressures remain low as businesses are reluctant to raise prices because of competitive markets. Mr. Bauer presented the reasons why the unemployment rate is under 4% and Maryland jobs are still growing at 2%. The underemployed and part-time workers supplement of the supply of new workers entering the job market. There is still a real inbalance between job requirements and job skills. Housing is for first time home buyers in short supply. Affordability is affected by wages and heavy debts of many young families. Predictions based on tax reform are difficult to make as the new laws will affect individuals and businesses differently depending on their special circumstances.
The question is how does the economic forecast affect estate planning? First, passing assets to children or helping them retire debt will greatly assist them enter the housing market. Second, demand for the skills of many older workers should keep them in the work force allowing them to build wealth. Finally, economic growth will benefit the portfolios of clients with substantial portfolios. All these factors add up to an environment where estate planning allows the senior generation to have a positive impact. Assets can be left to children who may need to start families and build their own retirement portfolios. Charitable giving is more important than ever. The social net grows thinner and technological change adversely affects many people who are unable to adapt to the changing job market. Our office stands by ready to assist those who want to be a good stewards of the assets they have accumulated over many years of work, budgeting, and good choices.