The U.S. is in the longest economic expansion ever. As 2020 rolls around, the economy will hit more than a decade in growth mode, past the 2008-2009 Great Recession. The stock market recently hit new all-time highs. Employment has been at levels not seen in a half-century. Interest rates have been eased several times this year, which means that companies theoretically have a good borrowing scenario if their business strategy indicates that expansion is the right idea.
But the fact is, growing economies eventually transform into slowdowns, if not outright recessions. What’s the outlook for next year? Will the U.S. face slowing economic growth?
The Overall Economy Is Still On Track
These concerns were faced by Jerome Powell, the chair of the U.S. Federal Reserve, in mid-November as he testified before the House Budget Committee. The Fed has lowered interest rates this year partly to maintain the steady growth of the economy and partially to mitigate any chance effects of a global slowdown due to U.S.-China trade tensions.
Powell’s economic outlook for 2020 is very positive. In fact, he observed that “the U.S. economy is the star economy these days” in his testimony, forecasting a continuation of moderate growth, and nixing any idea of an increased possibility of a recession, according to Bloomberg.
One risk of low rates is that inflation could start to overheat, but Powell doesn’t foresee any sign of that, either. He noted that no sector of the U.S. economy is overly robust, like the housing market that collapsed in 2008 or the technology sector that melted in the dot.com bubble of the early 2000s.
Not only that, but the robust employment picture and some growth in wages are increasing tax revenue to the best levels since the Great Recession, which bodes well for the states.
Employment and business growth both look robust for next year.
The Picture Is Not Consistent State to State
But if the overall U.S. picture looks strong for 2020, the image is less consistent for business leadership state to state. Some states, such as the western powerhouses of Washington and Nevada, are set to grow very strongly in 2020. But growth in many more, such as California, is moderating.
That’s not to say these states face recessions – growth forecasts are almost uniformly in the positive ledger. But there’s still a big difference between the 2% job growth expected in Nevada and the 1.7% expected in Washington state and California’s 0.9% projection.
California, of course, is affected by the U.S.-China trade war, as is the Midwest and prairie states and large ports in the southern states. Slowing growth worldwide is impacting the manufacturing sectors across states. While some New England states, such as Massachusetts, have robust economic outlooks fueled by technology and pharmaceuticals, others, such as Maine, are languishing because a declining population makes it difficult for businesses to expand.
The picture may change for the states affected by trade tensions if the U.S. and China reach accords on trade tariffs and other issues. If so, many could bounce back as trade picks up.
So will 2021 be as robust as 2020 is forecast to be? Stay tuned.