The US economy is projected to continue growing for a 12th consecutive year in 2020, albeit at a slower pace.
According to a new forecast released by the Indiana University Kelley School of Business, the US economy is forecast to expand by 2 percent in 2020.
Consumer and business confidence has been affected by this year by political dysfunction and international trade friction. The China–United States trade war has brought a wave of new tariffs (duties or taxes that are levied on imported products), disrupting global supply chains. There are also other global risks, such as Brexit, that remain unresolved.
Next year, global growth is projected at 3.4 percent.
This heightened level of economic uncertainty has prompted businesses to be more cautious about investing – many corporations have been buying back stock instead of making capital investments.
Another issue weighing on US expansion is the country’s tight labor market – companies are expected to continue facing this issue next year.
“The total number of job openings in the economy peaked in late 2018,” said Bill Witte, associate professor emeritus of economics at IU.
“Average hours worked have been flat over the past year, and auto sales have been flat for nearly two years. Given the reliance of the U.S. economy on consumer spending, these are disturbing signs. But they are vague signs, and not enough to convince us that the end of the expansion is in sight.
“We expect that growth will be weaker than in the past two years, and this outlook is likely a best-case outcome,” he added. “There is massive uncertainty in the current situation.”
The Kelley School presented its forecast to the Indianapolis community and business leaders at IUPUI. A detailed report on the outlook for 2020 will be published in the winter issue of the Indiana Business Review.
