Economic growth has triggered a Fed Interest Rate Hike and TSP Growth coincides. Since the start of 2017, the US economic data has steadily improved, and the Federal Reserve is raising rates as a result. A steady increase in the financial data is demonstrating a sound reason for higher rates. The increased economic activity is also helping the government pave the way for continued increases in the interest rates. The Federal Reserve rates had been predominantly stagnant over the past decade, and this rate hike may be something that suggests more ‘Interest Rate Normalization.’
Fed Interest Rate Hike and TSP Growth
Since the November election, there have been a solid number of new jobs and an overt acceptance by much of corporate America that the future under Trump looks rather bright. Corporate America’s excitement about prospects may prove to be a great sign for the federal government.
This increase in jobs and economic data has caused the Federal Reserve to raise rates in recognition that the economy needs less help under Trump to achieve the desired 2% target growth. Federal employees who are investing in their Thrift Savings Plan have likely seen a rather sharp increase in their account values due to the market’s run-up since the election. Wednesday’s rate hike, which in decades past has typically been seen as a negative to the potential of the market were met with near record-high closes for the DOW, S&P, and NASDAQ.
To be able to see a higher rate bias from the Fed finally is something that has brought smiles on the faces of many people – especially fixed income savers. Here’s hoping that the rate increases lead to a more normal interest rate market and that that market brings about ongoing economic expansion.