All throughout the financial services and investment landscapes, 2019 was considered as a rather unpredictable and dynamic year. Despite having a truckload of uncertainties that are still there in the beginning of this new decade, one can expect 2020 to be equally tumultuous. Nevertheless, it is still a great year to participate in the market as an investor. Read on to know about few predictions for the global market in 2020.
The US economy – What will it look like in 2020?
You must have seen the condition of a BBQ grill just after an hour of taking off the steaks – the grill is hot but is not blazing! This will be the condition of the American economy in 2020. The tax breaks introduced in 2017 will have been worn off by now and although the China-US trade war is all set to be resolved, the companies tried to rein in their strategies so much in 2019 that it will now get hard to evoke growth. It is most likely for the Federal Reserve to raise interest rates but in case the economy drastically slows down, this might even change.
On the other hand, the global economy will gain momentum after remaining sluggish throughout the last few years. The growth in China is undeniably slowing down but it is again growing at a more than 6% rate and the government of China is doing its level best to keep the economy hot and alive. With the cooling down of the trade war and a reduction of interest rates, the neighboring economies will experience more growth.
Is there a recession down the horizon?
No, there are no chances of a recession in 2020! In spite of the fact that industrial production and manufacturing have been slowing down, still the main economic indicators have juice in them. With the end of the trade war between US and China, there will be an improvement of corporate confidence and the consumers in the US will stay strong due to the healthy condition of the job market, low gas prices and low inflation.
Outside America, Germany is a country that is wobbling on the edge of recession and this could be the reason of Eurozone pulling down with it. Although Christine Lagarde doesn’t worry about the economic stimulus, you can rely on her and do what you need to do in order to steer clear from a tough landing in Europe.
Are interest rates going to be raised by the Fed?
Each and every economic signal supervised by the Fed is right at the position that Fed wants them to be. With a tame inflation and full employment, reduction of interest rates will open up new opportunities for refinancing and henceforth lead to more money in the pockets of consumers. In case inflation ticks higher, the Fed might again raise interest rates though that could have a bad impact on Chairman Powell’s job! It is rather better if the rates stay right where they are!
Consumer spending will remain strong As long as the price of gas remains low, companies keep hiring people and interest rates stay low, consumers will continue with their expenses. A change in any of the aforementioned variables can lead to consumers reining in their expenses once again. Here we mention gas prices because grocery shopping and filling up the tank are most tangible forms of expenses of consumers.