With the prospect of an election, impeachment, trade war and Iranian crisis all happening this year, there may have been cause for concern for the 2020 US economic outlook. Will the longest economic expansion in US history finally come to an end? The short answer is not in 2020. I have scoured the internet for the latest US economic forecasts and have found the news to be good for 2020.
GDP
There will not be a US recession in 2020! That’s the good news. The just “okay” news is that US GDP growth will slow from 2.3% in 2019 to around 2.0% in 2020. The range of forecasts was from 1.8% to 2.1%. Most sources cited the continuing US-China trade war as the main cause for the lower growth rate. However, with a US-China phase 1 trade deal now in place, maybe there is some upside to the 2020 GDP growth rate.
Unemployment Rate
The labor market will remain tight in 2020 with unemployment projected to remain in the range of 3.5%-4.0%. That is bad news for employers having problems filling open positions. It is good news for workers who are expected to see average pay increases of 3.0%.
Inflation
The Core Inflation Rate, which excludes volatile food and gas prices, is expected to rise slightly from 1.6% in 2019 to 1.9% in 2020. Some pass through of wage gains is the primary driver for the increase.
Business Investment
Despite the availability of cheap capital, the growth in Real Business Investment for 2020 is expected to slow slightly from 3.0% in 2019 to 2.5%. The US-China trade war has been the cause for the decline over the past two years, so the current resolution could be positive for Real Business Investment in 2020.
Conclusion
Slow and steady without much change from last year is the overall consensus for the 2020 US Economic Outlook. I now have to provide my disclaimer of any responsibility for these forecasts as actual results may differ. At Eldridge and Eldridge Fan we hope the actual results will be better! I