Happy New Year!

As you close your books for 2011, take the time to reflect on the successes you had in the last twelve months.  They may be few, many, big accomplishments or just a little improvement.  Either way the key is that you moved forward. 

So did the economy. 

As you review your financial plan as discussed in our last post, keep in mind some factors that may act as a barrier to prevent you from your 2012 financial goals:

Economic growth – without economic growth, it’s unlikely to see any dramatic change in unemployment.  Unemployment in Wisconsin currently stands at about 7.7%; the national unemployment rate is 8.6%.  The economy needs to grow around 1.8% in terms of GDP in order to sustain the growing population.  Consequently, if our economy grows at 1.8% the expectation of employment would remain flat.  Currently, our economy is growing at (based on 3rd quarter numbers), well 1.8%…indicating no incentive for businesses to hire. 

Inflation and the rising cost of living – Inflation and the cost of food influence our day to day cost of living.  Both inflation and the cost of food have soared throughout 2011, adding insult to injury, the economy has stalled and unemployment has remained uncomfortably high.  This is a good indication that many U.S. consumers will continue to adjust their budgets and eliminate expenditures that is out of proportion from their income.

Energy costs – Although the national average price of gasoline is expected to drop to around $3.00 per gallon, the unrest in the Middle East continues.  It is unknown what effect Iran’s threat of cutting off the Strait of Hormuz will culminate to, but the unknown is reason for concern when developing your financial goals.

Most investors are optimists by nature, but it makes sense to look at the risks that might deter you from your goals.  As we head into the year of the Mayan Apocalypse, what other risks are out there for the coming year???


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