Economic Outlook (2019-2021) for the U.S. Economy

The Federal Reserve predicts GDP to slow to 2.1 per cent in 2019, and further slowdown to 2 per cent in 2020 and 1.8 per cent in 2021. That is still in the broad, ideal range of 2-3 per cent. But somewhat lower than Trump’s promise of 4 per cent.

The U.S. debt remains a concern. It exceeded USD 22 trillion in 2019, or 106 per cent of GDP. A level seen as non-sustainable if interest rates were to rise. The IMF views tipping point as 77 per cent. With changes in weather pattern, costs to the U.S. economy is estimated at USD 112 billion annually. That will drive debt higher. Commodities like wheat, corn and rice are impacted by extreme weather.

Source: EIA’s Energy Outlook 2019

Some feel oil prices will average USD 85.70 during the period 2018-2040. Shale then will make 65 per cent of all U.S. oil production.

The U.S. cannot afford to start another war but U.S. will retain its military bases around the world. That alone will be a hefty budget.

Inflation will remain benign (below 2% upto 2021) but a weak dollar strategy may drive exports. Unless migration issues are sorted, U.S. will lose its diversity and ability to innovate and create new technologies.

The fastest growth in jobs will be in the healthcare sector, followed by computer systems design, education and renewable energy. Baby boomers are not retiring because of the Great Recession (2008). So millennials will need to adapt and look at technological innovation for new job creation.

The bottom line is to be aware of economic trends and take advantage of them.

Reference:

1. Kimberly Amadeo, US Economic Outlook for 2019 and Beyond www.thebalance.com

2. Kimberly Amadeo, Top Six US Economic Trends www.thebalance.com