The United States Economic Outlook- Trends in 2019 and anticipated changes beyond

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The key economic indicators imply that the economic outlook of the “Land of Opportunities” is healthy and positive. GDP or the Gross Domestic Product, being one of the critical indicators, implies that the production output of the country is pretty good.

“Goldilocks Economic.”

The GDP rate of growth is very much within the ideal range between 2% and 3%. However, the forecast for the rate of unemployment will continue to take its natural path. And since there is no remarkable rate of inflation or deflation, it is being referred to as “Goldilocks economy.” 

What are the changes you can expect in the US economy?

The GDP growth is likely to slide back to 2.2% from 3%, signs of which have been showing since 2018. However, it is likely to bounce back to 2% in 2020 and will shrink a little in 2021 to 1.9%.

One of the main reasons or the fluctuations is due to the Trade War. It is one of the critical elements of the economic policies laid down by the Trump administration.

Rate of employment

The average rate of unemployment is approximately 3.7% in the current financial year and is slated to be the same in 2020 too. And in 2021, there can be a rise in the same, which is estimated to be at 3.8%. Unfortunately, this projection of 3.8% is way less than what the Federal government aims to achieve, the target that it has set is 6.7%.

One of the main reasons for the inability to achieve the target as pointed out by Janet Yellen, the former Federal Reserve Chair is that the majority of the workers have part-time jobs and would prefer switching to full-time ones if available. Also, the primary area where job growth is taking place is in the retail services sector, where the jobs are mostly low-paying.

Inflation

Inflation is going to average at 1.5%, which will see a rise in 2020 to 1.9% and 2% in 2021. The Fed is expected to make use of the core inflation rate for framing the monetary policies.

The target inflation rate of the Federal government is 2%, which is slightly more than the core rate. It might trigger lowering the interest rates. 

Manufacturing in the US

The manufacturing sector in the United States is expected to grow at a faster pace than the overall economic growth. Two main reasons that are being held responsible for the surge in the manufacturing sector include-

  • Capital Growth
  • Higher rate of exports

The above assessment wad furnished by the MAPI Foundation. It also anticipates that production, which in 2019 is around 3.9%, will shrink a little in 2020 to 2.4% with a further decline to 1.9% in 2021.

Gas and oil prices

According to U.S Energy Information Administration, the cost of crude oil will be $64 per barrel towards the end of 2019. The oil contracts are in dollars; the dollar being strong will tend to suppress the price of oil.

In a nutshell, 2019 will witness subdued growth”, although it is quite unlikely that there will be a recession too soon.

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