U.S. Economic Outlook for 2019 and Beyond
The US economy is currently subdued as a result of the existing trade war between the United States and China. The growth of the US economy has slowed down and is likely to stay at 2%. The growth in consumer spending is also holding up, in view of poor employment figures and increasing wages. In addition to this, even the investment and business spending figures aren’t providing much support to the US GDP. Global economists are of the opinion that America’s net exports will continue to drag its overall economic growth down, even as the USD remains solid and imports grow faster than exports.
The U.S. Gross Domestic Production growth will likely be 2% in 2020 and may drop down to 1.8% in 2021 according to an FOMC forecast report released in the month of June 2019. In
The rate of unemployment, which currently stands at 3.6%, will rise to 3.7% in the year 2020 as well as 3.8% in the year 2021. This is much lower than Fed’s expected target of 6.7%. The rate of participation from labor force is on the rise while the labor markets are still tightening at a much slower pace when compared to 2018.
Job growth in U.S. is present in business and professional services as well as government and healthcare sector. On the other hand, manufacturing as well as other major service sector of the U.S. market has shown massive employment gains of late. As far as the trends in the labor market are concerned, they are much in support of the growth in disposable income and higher consumer spending.
Inflation, on the contrary, stands at 1.5% and is likely to increase to 1.9% in the year 2020 and around 2% in 2021. Given the current inflation rate, Fed may push for lowering the interest rates. Manufacturing in the U.S. is forecasted to rise faster than the overall economy in general. According to the MAPI Foundation, higher exports and increased growth of capital will bolster manufacturing. The Foundation estimates production to go up by 3.9% in 2019 and to slow down to 2.4% in 2020 as well as 1.9% in 2021.
Also, the Fed that lowered the fund rates to 2.25% on the 31st of July in 2019 isn’t expected to hike the rate of interest rate in the near future. Apart from this, the U.S. Energy Information Administration predicts that the prices of crude oil will be $64 per barrel on an average in the latter half of the year 2019. In fact, the average price of Brent oil will have risen to $81.73 per barrel by 2025.