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Good Morning

With 2015 halfway done, it's time to take stock of the economic landscape

Review your investment accounts and be sure to

Review your investment accounts and be sure to rebalance them so that your asset allocations remain in check. Credit: iStock

Every January, I outline the big issues and economic predictions for the year ahead. With the first six months of 2015 down, let's take an intermission to review the highs and lows of Act I and look ahead to Act II.

THE U.S. ECONOMY: There were great hopes coming into the year, but a trio of events conspired to dash them. For the third time in five years, the U.S. economy contracted in the first quarter of the year (2011, 2014 and now 2015). The combination of bad winter weather, the West Coast port shutdown and shrinking investment in the energy sector due to lower oil prices caused Q1 GDP to shrink by 0.2 percent. However, a number of encouraging signs suggest that growth has snapped back in the second quarter and beyond: Despite a weak reading in March, job growth is accelerating and wages are edging up; new and existing home sales have reached six- to seven-year highs; personal income and spending have jumped; and consumer sentiment is at a five-month high.

FEDERAL RESERVE RATE HIKES: In January, I predicted that "the first rate hike will occur in the third quarter of the year." I'm sticking to my guesstimate that the Fed will increase rates for the first time in over nine years at the September meeting, especially after Janet Yellen, chairwoman of the Federal Reserve Board of Governors, said that she expects "the economic data to strengthen."

OIL: Oil prices bounced up from the $40 lows to $60 per barrel and have settled into a trading range. While drivers may miss those sub-$2/gallon prices at the pumps, they can take solace in the fact that prices are down about 90 cents from a year ago.

HOUSING: The improving economy and labor market, combined with still-low mortgage rates and loosening credit conditions, should help housing in the second half of the year.

MARKETS: Stocks have bounced around a bit more this year than last, but the story is the same: Investors are laser-focused on Fed rate hikes, and bonds appear to have started the long-anticipated drop in price and rise in yields.

Big-picture trends and forces are out of your hands, but you can take action in your financial life to gain control.

INVESTMENTS: Review your investment accounts and be sure to rebalance them so that your asset allocations remain in check.

RETIREMENT: Use EBRI's "Choose to Save Ballpark E$timate" ( to calculate where you stand.

HOMEOWNER'S AND RENTER'S INSURANCE: Well before hurricane season or the next wildfire, review your insurance. The three biggest mistakes that people make with their homeowner's or renter's insurance are: under-insuring; shopping for price only and not comparing apples to apples; and not reading policy details before a loss occurs.

ESTATE PLANNING: Hire a qualified estate attorney to prepare a will, power of attorney and health care proxy/living will. Those with larger estates, or who want more control over the disposition of their assets, may want to consider a revocable or changeable trust. In 2015, the estate tax exemptions are $5.43 million for individuals and $10.86 million for couples.

Jill Schlesinger is editor-at-large for She welcomes emailed comments and questions.

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