The U.S. economy performed reasonably well in 2018. However, the country is likely to witness a slowdown in 2019. According to leading economists, while the United States economy won’t enter a period of recession, it will witness slow growth in 2019. In this article, find out what would be the outlook for the US economy in 2019.
What Future Beholds for the U.S. Economy?
As per a Bureau of Statistics report, the U.S. Gross Domestic Production increased by 3.5 percent in its 3rd quarter as well as 4.2 percent in its 2nd quarter in 2018. The American economy put up an excellent performance in 2018, even the government continued to maintain its spending, consumers increased their spending and organizations continued to invest money towards buying inventories.
However, this economic growth will witness a slowdown in 2019. According to the expert economists at Goldman, the United States GDP will witness a slow growth of 1.8 percent in the 3rd quarter as well as 1.6 percent in the 4th quarter of 2019. Goldman further stated that the financial condition would tighten in 2019. While, Goldman is convinced that recession wouldn’t hit the U.S. economy in 2019, Larry Summers, an economist who represents the Harvard stated that there’s almost a 50 percent chance that the recession would hit by 2020.
In view of the rising rates of interest, borrowing has become more costly for both companies as well as consumers. Apart from this, trade related tariffs have also increased, after Trump decided to get aggressive with the trade rules and policies and the analysts at Wall Street are showing major concerns for the growth in earnings recorded by the market.
Given the above scenario, the economists are anticipating the world economy to slow down. Even the OECD (Organization for Economic Cooperation and Development) has forecasted that the world economy would grow only by 3.5 percent instead of 3.7 percent forecasted earlier. Another survey conducted by the Bank of America Merrill Lynch, where the bank took the opinions of the fund managers into consideration, revealed that around 44 percent of the respondents are expecting the global economic growth to witness a drop in the year 2019.
Yet another update from the CBO (Congressional Budget Office) forecasted that the GDP is likely to slow down by 2.4% as a result of the slowed government purchasing and growth of business investments. The office further pinpointed that the existing trade related tensions can further cause the economic growth to slow down. The increasing differences between United States and China (with respect to trade) can lead to tariffs being imposed on nearly all the goods that are traded among the two countries. The CBO has forecasted that the U.S. economy would grow by nearly 1.7% every year between the years 2023 to 2028.
By André Lazzuri