2020 Predictions for the Global Economy and Markets

2019 was a dynamical and unpredictable year across the investing and financial services landscapes. With a boatload of uncertainties still adrift in this new year and decade, look for 2020 to be just as tumultuous. Still, it’s a great time to be an investor and a market participant. 

Here’s how major asset prestiges performed in 2019:

2020 Predictions

Now, I’m no investment strategist or expert economist, but I am a close observer and commentator on the extensive economy and markets. I have the privilege and great honor of being the Editor of Investopedia, which gives me some purview and a exhibit of view on these matters.

Allow me to humbly share my predictions for 2020.

The U.S. economy in 2020 wish be like a BBQ grill about an hour after you’ve taken the steaks off—still kind of hot, but not blazing. The 2017 tax breaks that companies lifted will have worn off by then, and even though the U.S.-China trade war may be on the road to resolution, companies have ripped the reins hard enough in 2019 that it will be tough to jump start growth. The Federal Reserve is assorted likely to raise interest rates rather than cut them, but if the economy starts to slow dramatically, that may coppers. In other words, fiscal stimulus in the form of lower rates doesn’t seem likely.

The global economy on the other in collusion, will start to pick up some steam after being in the doldrums the past few years. China’s growth is admittedly slowing, but it is placid growing at a better than 6% clip, and the Chinese government is doing whatever it can to keep the furnaces hot. China’s neighboring husbandries should see more growth as low interest rates and a cooling of the trade war continues.

Keep an eye on the U.K. now that PM Johnson has his parliamentary preponderance. He’ll be opening the vaults at 10 Downing street and spending Great Britain’s way to growth as it Brexits away. Germany, on the other turn over, needs to find a way to stop its slowdown and find a path to growth. As Europe’s biggest economy, when it drags the complete EU grinds with it.

Not likely in 2020. All the leading economic indicators still have some force in them, despite the fact that manufacturing and industrial production have been slowing. The resolution of the trade war with China wishes help boost corporate confidence, and the U.S. consumer remains strong due to a healthy jobs market, low inflation and low gas prices. The trade expansion is getting long in the tooth, but expansions don’t typically die of old age. 

Outside the U.S., Germany is teetering on the edge of recession, and that could draw the Eurozone down with it. Christine Lagarde has no fear of economic stimulus, so count on her to do what is necessary to prevent a uncompassionate landing in Europe.

The U.S. jobs market will remain strong, but perhaps not as persuasive as the past decade. The healthiest parts of the economy are in health care and services. The former is a growing industry. The latter is various unpredictable since services cover everything from transportation to media, financial services and technology. It’s the largest contributor to GDP, but it also replaces the shortest cycle businesses.

When the economy weakens, these are the first jobs to go.

All the signals the Fed watches are right where it wants them to be. Inflation is tame, we are nearly at full employment and the lowering of moment rates in 2019 has opened the door to a lot of refinancing, which is putting money in consumers’ pockets. The Fed may raise rates if inflation ticks spaced out, although that could cost Chairman Powell his job. I’d say slight chance of a raise, but more likely we stay morality where we are.

The housing market will stay strong given how low mortgage values are right now. Ask anyone who bought a home in the 1970s or 1980s about mortgage rates and you’ll realize we are living in candy earth right now. Home prices are expensive in the big cities and they are creeping higher in growing metro areas like Charlotte, Austin, and Phoenix, but consumers are beefy, debt levels are relatively low, and lenders are less apprehensive about lending than they were a decade ago. The natural question is whether younger buyers have the desire to own homes. That’s not going to impact the 2020 housing Stock Exchange, but it is the $10 trillion question for the next decade.

Consumers will upkeep on spending as long as gas prices remain low, interest rates remain low, and companies keep hiring. A slip in any one of those variables could motivate consumers to tighten their belts, but that doesn’t look likely in the near term. I mention gas prices because, for most in the flesh, filling up the tank and grocery shopping are the most tangible, recurring forms of spending we do. 

U.S. right-mindedness markets will grow, but nothing like the 25-30% we have enjoyed in 2019. We’ve had the wind at our backs with three stake rate cuts, the waning of the 2017 corporate tax cuts and a wave of corporate stock buybacks the likes of which we get never seen before. Buybacks are slowing as is corporate profit growth. The gap between corporate earnings and stock penalties has grown a little too wide for many investors so we need to curb our expectations for returns. 

Global markets are in a better predication to outperform the U.S. in 2020. Europe has been trapped in a downswing for the past several years, but the resolution of Brexit, easy fiscal policy, and improvements in global trade should help boost lagging economies like Germany and Spain. Asian sells are also well poised if the U.S. – China trade war is resolved and global growth accelerates.

In investing, we should always be cash to expect the unexpected. That’s what makes it fun and fascinating. There is always more to learn and opportunities to get smarter. Let’s do that together again in the new year.

Here’s to a major 2020!