January 12, 2018 // Boston, MA – Economic data strengthened throughout 2017, defying the expectations of economists and investors. After a lackluster 2016, the year-over-year index of leading economic indicators accelerated aggressively, and the Citi economic surprise index climbed to historic highs. Unemployment dropped by 0.6% to a 17-year low of 4.1%, while wage growth remained conspicuously muted, keeping labor cost increases minimal and sustaining corporate profit margins. While it may seem appealing to ride the market’s momentum, and to be optimistic at the end of a year of strong performance, we believe that the current elevated expectations will make it very difficult to match the investment performance of 2017. In our view, the outperformance of defensive equity themes in 2017 reflects many investors’ recognition that the economic cycle is extended and that caution is warranted. As accountants, taxpayers, businesses, and the market begin to understand the uncertain effects of the new tax bill, we believe that this caution remains appropriate and core to our goal of preserving capital.