This year’s Lunar New Year ushered in the Year of the Rat on the Chinese calendar. The past year, the Year of the Pig, might more fittingly be labeled “year of the bear” given the number of grim outlooks for the U.S. economy that were offered up by economists and pundits.
Whether it was the inverted yield curve, the trade war with China, a residential real estate meltdown, or some other perceived economic calamity, there were a lot of bets that the now record-long expansion was going to come to an end, and soon.
Yet as we move through the first quarter of 2020, incoming data from 2019 doesn’t indicate anything that signals an impending recession. While the quarter-to-quarter data for the year was quite volatile, overall, 2019 saw U.S. GDP grow at about a 2.3% pace—just slightly slower than the year before. There was a slowdown in business investment—but this was made up for by falling imports and a pickup in public spending.
Looking ahead, Beacon Economics’ expectation is that U.S. GDP growth in the first quarter of 2020 will be in the 1% to 2% range. For the year overall, expect a modest rebound and growth in the 2% range. Employment growth will slow, but only because of a tight labor market and the difficulty employers face in filling open positions. Rumors of this expansion’s imminent demise continue to be highly exaggerated.
Other economic indicators from the past year are also positive. Residential real estate markets have returned to “normal” in terms of sales, and prices are accelerating again. There were 2 million jobs added to the payroll workforce last year and unemployment has remained low. Data from the Atlanta Fed shows worker wage growth accelerating in 2019 over 2018, and savings rates picked up to 8% by the end of the year. Interest rates are low, as is inflation. The bearish headlines have started to diminish along with the fear of an impending recession. This will come as good news for President Trump’s reelection bid and will remain a central point in his pitch to voters.