While we might still have a couple of month to 2019, economists have already started to look at the New Year 2019 and forecasting its growth. If the predictions of economic experts are to be followed, the growth of the economy of the United States is expected to remain above average through the end of 2019. However, it could fall back from growth levels as witnessed in 2018. This is the take of Steven Rick, director, and chief economist at CUNA Mutual Group.
“We continue to enjoy one of the most prosperous stretches of economic expansion in our country’s history, and this positive economic climate has greatly benefitted credit unions,” Rick said. “Today, there are more job openings than unemployed people in this country, marking the first time that’s ever happened.”
“Unemployment sits at about 4% now, and should fall as low as 3.4% in coming years – far below the expected long-term unemployment rate of 4.7%,” he said.
The same position has been taken by the guys at Fannie Mae, predicting a fall back in growth in economic growth to 2.3% in 2019. However, the growth according to Fannie Mae is not attributable to the housing market.
“Breakneck headline growth in the second quarter disguised a detail largely responsible for the latest upward revision to our full-year growth forecast: a need to restock declining business inventories, which we expect will support greater growth amid weakness elsewhere,” Fannie Mae Chief Economist Doug Duncan said. “Housing continues to drag on growth due to lackluster homebuilding activity, home sales, and brokers’ commissions; and its overall weakness likely reflects continuing inventory shortages, rather than a decline in demand.”
“While meaningful wage growth remains elusive, the labor market is strong and inflation appears to be gaining additional steam, making a Fed rate hike in September highly likely,” Duncan said. “Assuming consumer and business confidence can steer clear of escalating trade tensions, we expect the Fed to raise rates two more times in 2018, including next month.”
However, 2020 might not necessarily follow the same direction as 2018 and 2019 as the economy has been predicted to slow down and this follows the basic trend of recession coming after a drop in the rate of savings.
“Whenever savings rates drop to 3% or 4%, expect a recession the next year,” Rick said. “Given how consumer confidence is at its highest level in 18 years – prior to the dotcom crash – it’s no surprise that people are buying instead of saving.”
“We are now down to 3%, so a recession by 2020 seems likely, but we should not be worried about it resembling what we experienced a decade ago in 2008,” he said.
Several economic experts have actually that 2020 will bring the next recession with some predicting that growth will start to fall at the tail end of 2019.
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