By Eric Tashlein
Your Finances
Eric Tashlein.
The U.S. economy kept growing through 2019, albeit at a slower rate at the end of the year than at the beginning. The year was marked by record low unemployment rates and record high stock values.
In light of continuing trade tensions and recession worries, predictions for 2020 are surprisingly optimistic. Fannie Mae, for instance, in November upgraded its forecast for U.S. growth in 2020 from 1.7 percent to 1.9 percent. The government-sponsored mortgage lender cited increased consumer spending, a healthy housing market and the likelihood of a trade deal between the U.S. and China. The agency predicts growth will average 2.1 percent for 2019.
Business analysts at Indiana University also predicted in November that the U.S. economy will grow for the twelfth year in a row in 2020, at a 2 percent growth rate. Employment will continue to grow but not as strongly as in 2019, predicts the Kelley School of Business at IU.
Morgan Stanley predicts slower growth, with GDP growing 1.8 percent next year compared with 2.3 percent this year. The company’s analysts believe the U.S. economy will remain on “a solid footing” but caution that uncertainty over trade policy could pose a downside risk. Goldman Sachs is even more optimistic, predicting GDP growth will reach 2.3 percent next year, matching this year’s rate of growth.
The Conference Board, a business think tank, in October predicted annual GDP growth of 2 percent in 2020, and the National Association for Business Economics predicts GDP growth will fall to 1.8 percent in 2020.
Globally, Morgan Stanley predicts economic growth of 3.2 percent next year, up from 3 percent this year, driven by easing trade tensions and easing monetary policy. Goldman Sachs forecasts global growth of 3.4 percent in 2020, up from 3.1 percent this year, citing friendly monetary policy and limited recession risk.
In October, the International Monetary Fund lowered its global growth forecast, revising its 2020 prediction from 3.5 percent to 3.4 percent growth. The World Bank has forecast 2.7 percent growth in 2020, and the Organization for Economic Cooperation and Development forecasts 3 percent growth in 2020.
Major U.S. stock market indexes hit historic levels this year. No one is sure whether this market will eventually die of old age or from global events. Just be sure to review your holdings heading into the new year and make your adjustments based on a well thought out plan.
Eric Tashlein is a Certified Financial Planner professional™ and founding Principal of Connecticut Capital Management Group, LLC, 2 Schooner Lane, Suite 1-12, in Milford. He can be reached at 203-877-1520 or through connecticutcapital.com. This is for informational purposes only and should not be construed as personalized investment advice or legal/tax advice. Please consult your advisor/attorney/tax advisor.