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Market Views - Economic Outlook 2020

Outlook 2020

Economy

A Tale of Two Economies:

We find a divergence between confident consumers and wary businesses. The consumer, buoyed by a low unemployment rate, decent wage growth, higher net worth, lower debt service and a rising stock market, continues to spend.

The business sector, on the other hand, has sharply pulled back on investment. Industrial production and the Institute for Supply Management (ISM) manufacturing survey are in territory usually associated with a contracting economy. At the same time job openings and manufacturing payrolls are slipping. Lastly, trade tensions and global economic weakness are undermining business confidence.

This tug of war will only end if the consumer can convince businesses to reverse their negativity as they did in 2015 and 2016. The other unfortunate possibility is businesses start cutting jobs which would erode consumer confidence.

While late in the economic cycle, worker’s pay is still rising faster than consumer prices and almost everyone who wants a job has one. The outlook for the consumer sector remains solid. The manufacturing sector is facing some challenges because of tariffs and geopolitical uncertainties.

In the end, we believe the consumer will carry the day, so we are not likely to see a recession in the coming year. However, we expect sluggish economic growth here and abroad.

Positives Negatives
Positive Inflation Subdued Negative Slowing Business Investment
Positive Accommodating Fed Negative Contraction In Manufacturing
Positive Residual Benefits Of Tax Cuts Negative Tariffs Disrupting Supply Chains
Positive Confident Consumer: Negative Falling Executive Confidence
Positive    - Low Unemployment Rate Negative Slow Global Economic Growth
Positive    - Growing Wages
Positive    - Rising Household Net Worth
Download The Long-term Economic Report (.PDF)   PDF


Disclosure

This information is of a general nature and does not constitute financial advice. It does not take into account your individual financial situation, objectives or needs, and should not be relied upon as a substitute for financial or other professional advice to assess, among other things, whether any such information is appropriate for you and/or applicable to your particular circumstances. In addition, this does not constitute an offer to sell, or the solicitation of an offer to buy, any financial product, service or program. The information contained herein is based on public information we believe to be reliable, but its accuracy is not guaranteed.

Investing involves risks, including loss of principal.

Past performance is no guarantee of future results.

ALPS Distributors, Inc. 1290 Broadway, Ste. 1100, Denver, CO 80203 (Member FINRA). ALPS is not affiliated with James Investment Research, Inc. or James Capital Alliance, Inc.

Quantitative Easing: a course of action undertaken by the Federal Reserve to increase the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity.

Yield Curve: a line that plots interest rates of bonds.

Contagion effect: a situation where a shock in a particular economy spreads out and affects others.

CCC Bond: Represents an extremely high risk bond or investment.

JAF000587 Exp. 12/31/2020

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