US Economic Forecast 2020
President Trump and China continue their fight for control over America’s consumers, stock market and media coverage. Let’s explore the key role of the US China Trade issues in this economic forecast for 2020 to 2024.
CNN recently reported that September’s historic low unemployment (3.5%) signalled a weakness in the economy. The New York Times says lower immigration threatens the economy. PBS says the Tariffs have cost the economy despite record growth. Barron’s says interest rate cuts will hurt the economy! How do those economic predictions strike you?
Will the Economy Crash?
Market Watch says Trump’s next move could crash the economy, while technical stock analysts are saying technical indicators show a market boom could be happening in 2020 and beyond.
With the experts contradicting each other at this degree, it is pointless to offer their forecasts. Most of the experts have aligned themselves along political lines. Since most oppose President Trump, their predictions are very tabloid in nature. They slant obscure stats and views as needed, proclaiming economic doom for years now.
Many have their reputations on the line with their 2020 economic recession forecasts in the books.
The Essence of the US Economy
The US economy is very complex which lends itself to many interpretations. It’s been on a fantastic roll for 124 months under bad economic conditions. If the trade deficit and interest rates are reduced, and government spending continues, there is no worry about a recession. Fed Chairman, J Powell has made this statement.
Consumer spending in October has slowed yet unemployment is at a record low 3.5%. It seems, the more a China/US trade deal is curtailed, the better the US economy outlook is.
With China’s economy failing, amidst a global slowdown, they will be dumping cheap products in the US. What’s been lost so far, are big profits for China’s companies.
Conference Board Economic Forecast 2020
- GDP growth forecast at 2% in 2020
- Real consumer spending will grow to 2.7%
- Residential housing investment will grow 1.6%
- Real capital expenditures will grow 3.5%
- Export to rebound .6% to just above even
Recent Economic Update
- economy grew 2% in 3rd quarter
- wages rose .6% in August
- 136,000 jobs added
- consumer spending grew .1% in August
- income growth outpaced spending so savings grew
- total us personal income rose $73 Billion
- disposable personal income rose $77.7 Billion
- personal consumption rose $20 Billion
- the PCE index rose .1% in August
Data above from the Bureau of Economic Analysis
Enjoy this critique of the forecasts, politics, stats and charts, and expert insights. What we can say is there is no correlation between the stock market and the economy. And no connection between the housing market and the economy.
President Trump is squeezing China with tariffs and it is boosting the domestic economy. With Jay Powell’s announced and expected further interest rate cuts, the housing market forecast is looking better. A good mortgage rate forecast will aid housing sales.
If the corporate pullback continues, it could raise the likelihood of a 2020 recession. However, at some point, these same corporations could be forced to renew their capital expenditures. The US economic forecast would be very bright indeed. That’s why some experts predict the economy will rocket again in 2021. The housing market forecast in particular seems to be positive due to low mortgage rates.
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Is China Hurting?
China’s economy may be slowing, but its balance of trade is very strong thanks to the US. Its trading partners are running huge deficits.
The America First transition wobbles its way forward as the President paves the way for US companies to grow, and place barriers for unfair foreign manufacturers. US manufacturing and jobs creation however have slowed with the trade turmoil. Both China and Mexico have expressed reluctance to continue trying to wear down President Trump.
What are the key issues to watch:
- China’s rapidly receding economy and plunging exports
- US tax revenues helping to ease government debt problems
- import tariffs beginning to force corporations to buy from US suppliers
- will corporations build their manufacturing operations in the US in 2019?
- US dollar stays strong
- will US manufacturing numbers keep declining?
- stock markets pushing to new record highs
- too much volatility will cause business to pull back spending
- anti-trust charges being laid on big monopolies?
- interest rates continue to decline?
- oil prices staying under control?
- inflation is weak, perhaps non existent
- housing prices stay relatively flat meaning more affordability
- what will President Trump’s next actions be?
The best news is the Fed’s expectation of interest rate cuts which the stock markets loved this week. Democrat’s claims of big inflation and crashed retail sales have not materialized. The economy keeps rolling forward, making the 2020 election predictions favor the President.
China Says They Don’t Want a Trade War
Chinese leaders suggest in formal statements that they want to trade. President Trump announced a 3 phase trade deal that would create $60 billion in agricultural exports. Good for US farmers but not something that will delight US manufacturers and tech companies.
A good guess is that this trade deal will fall apart. Chinese leaders have resistance so ingrained, they will likely not meet the agreement. Experts say China has never lived up to agreements.
How It Looked in the First Quarter
US stock market performance was excellent in 1st quarter. Major economists reporting very positive results.
- JPMorgan Chase & Co: upwardly adjusted their forecast U.S. real GDP estimate .9% to an annualized rate of 2.9% for 1st Quarter, 2019.
- Bloomberg: US retails sales jumped 1.6% to highest level in 2 years
- Atlanta Fed: 2109 1st Quarter GDP growth of 2.8%
- Census.gov: retail and food service sales surged $514.1 billion or 1.6% in March
- BLS: claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 192,000 (est were 205,000)
- Goldman Sachs: raised its growth estimate for the second half of 2019 by 25 basis points to 2.5 percent.
- Trading Economics: US unemployment rate down to 3.8%.
- NASDAQ: S&P 500 rebounded 13.1% in Q1 for its best quarterly performance in ten years.
- Trading Economics: Manufacturing production in the United States increased 1% YoY March 2019, following a 1.1% increase in February
China Trade Problem Decreasing
The trade in goods deficit with China is a severe problem. Despite President Trump’s efforts, the US continues to import products at very high levels. That in turn affects US balance of payments and US job creation.
“The goods trade deficit with China decreased 0.8% to $30.0 billion, with imports falling 0.7%. US Exports to China remained unchanged.”
ITC Forecast: the USMCA trade deal will benefit the US economy going foreward. The transition to an America First economic policy was forecasted to slow US GDP, however, it is lately that slowing activity is concerning.
Is now the best time the best time to buy a home?
“As small businesses across the country make up 99.7% of all U.S. employers and 64% of net new private-sector jobs, they truly are the backbone of the country’s economy and an aggregate indicator of its health and status” — from Fundera Report on the Booming Economy.
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2020 is Launch Year for Small US Businesses
With tariff protection, business confidence, and strong consumer wealth, big housing market demand, 2020 GDP growth could surpass any expert’s predictions, far from the negative prognostications of the media.
US Economic Growth Should Continue
The US was on a record run until the mid term elections and rising interest rates dampened the party. Even with the reduction of economic stimulus and the turmoil over protective tariffs, the economic predictions are good.
If this unexpected strength continues to the 2020 fall elections, it could determine the outcome of the Presidential elections. That might mean stabilization and the continuation of growing US manufacturing production and services exports. China’s economy is stabilizing which eases dire global economic predictions.
Latent demand for goods in the US remains high, and when tariffs and US manufacturing grows, Americans will buy more US made products.
Why the Big Optimism About the Economy?
US GDP is expected to grow strong through 2020. Optimism in business is high. The Wells Fargo Small Business Index is down from an amazing +136, the highest in its 15 year history, to 129. Given all the trade tension, this number is good.
With the intent to bring manufacturing back to the US, which hasn’t really begun, he US is seated strong for years to come. The next 2 years of US manufacturing development through 2020 will strengthen American competitiveness for decades. The US dollar will strengthen, stock markets will adjust, and it’s fun time ahead for Americans.
Fantastic Outlook for US Business and the Housing Market
The lagging housing market and small business sector should regain their stride once multinationals are forced to build factories in the US (Jan 1st, the 25% import tariff took effect. No free access for China is expected). The coming 10% tax break for the middle class makes 2019 look very good.
Multinational corporate stock market performance (NASDAQ, DOW, S&P and TSX) may see some further corrections as imports from cheap labor pools into the US dwindle. Here is NAR’s latest economic outlook:
The U.S. economy expanded at a 2.8% annualized rate in the first quarter based on data that showed domestic retail sales grew at their strongest pace in 1-1/2 years in March. The good news will improve the housing market forecast.
According to the St Louis Fed, forecast factors are as follows:
- 30-year fixed mortgage rates (extended downward rate trend despite the recent upward push by the Fed which they have ceased)
- Existing home sales (suffering a lul, but with recovering economic performance will see sales stimulated again)
- Real house prices (house prices have flattened, the heat is gone)
- Contribution of residential investment to GDP growth (the contribution of residential construction is down, however investors and builders might like the recent economic numbers and demand for housing)
1st Quarter 2019 Economic Performance
The US economy shone again in March. Job growth continued with 196,000 new jobs created. and unemployment kept at near record low level at 3.7%.
Healthcare jobs: up 49,000
Manufacturing jobs: up 22,000
Construction jobs: up 16,000
Transport and warehouse jobs: unchanged from last month
Leisure/hospitality jobs: unchanged
Professional and Business services: unchanged
Mining jobs: unchanged
There are still 412,000 discouraged workers and 1.4 million people are still marginally attached to the labor force.
Despite the short term volatility and negative stock market predictions, the US economy will grow. With inflation reported this month at 2.4%, there is little reason for the Fed chairman to raise interest rates.
And government spending wasn’t adding much to the economy anyway.
American Consumers are Becoming Wealthy
America has experienced one of the most powerful household wealth booms in its history. Household wealth has ballooned by approximately $46 trillion or 83% to an all-time high of $100.8 trillion – Forbes.com
The figure below supports the optimistic picture for the US economy. As long was multinational corporations are forced to develop a manufacturing presence in US, creating better higher paying jobs, the trade deficit will drop, and support for US startups and small business financial ecosystem will be healthy. It’s a great time to invest in US SMB’s and startups.
Good Times Ahead for American Producers
What this report translates to for 2020 and beyond, is stronger employment security, prime market access for US companies, better housing, more opportunities for young people with big student loans, returning entrepreneurial spirit, higher wages, and hope for a poverty/housing plagued nation for many years ahead.
Wage growth is improving as companies return from overseas, and zero tariffs to an economy bursting with potential.
If the Trump strategy doesn’t work, the US can always change course and ease its trade rules. It’s a no lose situation for the US economy. And so far, multinational corporate profits haven’t been affected.
In fact, with small business America decimated, these companies have no competition and are thus reaping ridiculous profits.
Volatile Market yet the Curve is Rising
While multinationals still resist building manufacturing plants in the US, the pressure is building on them, and they’re missing out on potentially even more lucrative US national markets (auto, electronics, furniture, clothing) — to wiser and new competition. Sticking with China is an increasingly losing proposition, as China begins to turn in on itself.
The US economic prediction is that the US is about to enjoy the same growth and opportunity that spawned the China revolution. High employment, new career opportunities, optimism, imagination, confidence, and hopefully soon, higher wages as newly created US firms begin to thrive and capitalize on a wealthy American consumer market.
New business formation was at its lowest in history when Trump was voted in. Since then it has risen, and with rising tariffs, lower regulation, and continuing low interest rates, the stage is set for an entrepreneurial boom in the US.
Reports say stimulus withdrawal and waning consumer confidence will end it all. Yet stats show strong consumer confidence and evidence that consumers are ignoring politically biased noise in the media. Financial experts on Bloomberg were hinting at another potential 10 years of boom times in the US.
Good news for the US economy. With manufacturing returning, US oil production growing, low corporate taxes continuing, business regulation dismantled, the macroeconomics for the United States is as good as it has ever been.
New Trade Deals Could Breathe More Life into US Business
Oil production, manufacturing, housing construction, and technology startups in the US haven’t even hit their stride yet. And while economic turbulence has caused discomfort, Americans should continue to enjoy years of strong growth and prosperity and to solve the affordable housing crisis and avoid any housing crashes in some cities.
The medica have tried to talk down the new US economic revolution, but they’re growing weak against a clear voice of confidence in America. If China can sustain 10% growth, the US can manage 3% to 5% growth just fine. There’s lots of room for improvement with no overheating possible.
Economic Recession? Why?
An endless array of economists, billionaires, millionaires, stock experts, and democrats are promising a big US economic recession within a couple of years. They cite stimulus statistics, global trade numbers, business cycle history, tradition, and trade impasses that will cause a recessions. In lieu of real economic performance statistics, consumers and voters are ignoring the dour outlook.
The US economy looks unusually solid, not a bear or a bull, but more like a Rhinoceros. While some bellicose doomsday sayers tout their complaints, they themselves keep pulling in higher profits from their US stock portfolios. Laughably ridiculous.
There are some exciting new statistics from housing to manufacturing to new business formation that bolsters a happy sustained outlook.
US manufacturing jobs were decimated as we all know, and as these jobs in modern manufacturing return, the economy will boom and wages will rise.
Manufacturing in America: Welcome Home
Consumers are not fulfilled and production capacity will grow. The talk of embargos on US goods are overstated for sure. Resentment from Europe, Japan, Canada, and Mexico will subside. US manufacturing output will grow in quality and the world will want US products. Who wouldn’t want reciprocal access to the US market?
American consumers are expecting good things. They’ll buy any house they can get their hands on and they won’t be buying as many Toyotas, Mercedes Benz and Beemers as before. Fords, Chevys and Tesla’s will be in good demand.
Trading economics forecasted 93.1 consumer confidence rating for fall 2018. It’s actually at 100.8 despite all the political and trade volatility.
The End of Free Trade
The end of Free Trade was predictable. American poverty, debt, and misery and lack of control has brought it to a stop. Fair Trade will be the new norm.
The defense of globalization rests on viewing Americans primarily as consumers, not workers, based on the assumption that we care more about low prices than about low wages — NY Times article
Free Trade wreaked havoc on American lifestyle, wealth, politics, and optimism. It was a concept for the 80’s, but it’s not the 80’s anymore. It has ruined people’s lives. The stock markets continue their happy upward direction.
A US housing crash is unlikely and the stock market looks pretty healthy. However, a global recession would affect the US as would a China collapse. President Trump knows it, which is why he keeps pulling back on 100% commitment to many of the policies he sets forth.
Housing starts keep growing as depicted below, and with demographics so positive (Millennials and Gen Z’s coming soon), the demand will be steep. It’s a fantastic time to be in US real estate.
America’s Burgeoning New Self-Esteem
It’s this matter of self-esteem of the American people that’s so critical. CNN and other media paparazzi think esteem is something dished out in scathing news reports. But what’s happening is a nation’s self-esteem is being regained and this time inoculated against media manipulation (the Media and big advertisers don’t like that).
Can Anything Stop This Incredible American Economic Boom?
A first thought many of us have is that the US economy is too strong to stop – a new economic locomotive with momentum. It’s partly powered by the relief of decades of economic evil and by the old belief (baby boomers) that the US should be strong and independent.
Some have felt Asia should lead the world. There’s something extremely unpatriotic about that.
Even if Trump disappears, the America first agenda will continue. The people will ensure it happens. There’s no going back to the poverty, debt and hopelessness, particularly for the forgotten in the rust belt and midwest.
How Could Anyone Vote Against This US Economic Boom?
The US renaissance has generated massive employment and improvement in lifestyles. And while the rich have benefitted most, as usual, the game isn’t over. With more investors making the transition to US equities, we see a reduction in hysteria over predictions and forecasts.
“Overall the report is good news insofar as it suggests the economy still has some capacity to grow at an above-trend pace without generating much inflationary pressure,” said Michael Feroli, an economist at JPMorgan in New York — Reuters report
In the meantime, the latest jobs report reveals continuous, excellent 200k+ job growth each month and droves of people coming back into the workforce. Skill shortages are a true threat to US manufacturing revitalization. People will have to be trained. The education industry should enjoy their outlook.
The unemployment rate rose to 4.0 percent in June from an 18-year low of 3.8 percent in May as 601,000 job seekers entered the labor force in a sign of confidence in the labor market — Reuters report.
Employed persons rose to highest levels in history.
Manufacturing in the US
Yes, cars, solar panels, smartphone apps, robots, and computer chips can be made in the USA by companies managed by US executives (sorry India). There is real hope for the future of young Americans.
Trump is a Tactician
That’s practical. He’s a tactician assessing immediate feedback, not a strategist with a python intellectual grip, which is why his enemies are taking the higher road with a hope and a prayer. Their path is ill-advised though because that highway is congested with tens of millions of dejected Americans who thought Free Trade would be okay. Now they know they got sold.
With Trump, the strategy is simple — support American business and everything else will fit in perfectly. So far, it’s working.
The US economy is doing well and all the fundamentals support an ongoing economic boom through 2024. Trump’s strategy is clear — protect American companies and markets so they can spawn for generations.
The housing market could be better, yet construction is okay and demand is certainly strong.
This chart above shows the growth of the US housing market will likely pick up its pace in the last half of 2019. Interest rates are expected to stay low, putting little pressure on defaults, and keeping demand for new construction nice and healthy. Homebuyer are sitting on the fence hoping for lower prices, however a housing market crash is very unlikely.
This kind of growth is more resilient, aware of danger, ready for events, so it’s in control. It would take something massive to stop its forward thrust.
What’s the last word in the US economic revival? Momentum. It’s gone through its temporary adjustment period in the winter of 2019/2019 and there’s lots of forward drive into 2020. The US economy is robust and growing and few will want to see this fantastic, business life-giving economic cycle end. As stock markets modernize and adjust, we’ll see the DOW Nasdaq and S&P all improve.
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