The 2020 US Economy & How It Affects You

The U.S. economic outlook is healthy according to the key economic indicators. The most critical indicator is the gross domestic product, which measures the nation’s production output. The GDP growth rate is expected to fall below the 2% and 3% ideal range. Unemployment is forecast to continue below the natural rate. There isn’t too much inflation or deflation. That’s close to a Goldilocks economy.

Over the next several years, the economy will grow more slowly. Unemployment is expected to remain low, as will inflation.

No matter what the economy looks like, you should never sacrifice the quality of your hires. MyOutDesk’s highly talented virtual assistants are ready to be part of your team to lead you to success whatever the economy may look like. Book your Double My Business Strategy Session today to find out how!

This is our economic outlook according to the balance.com:

Economic Growth

U.S. GDP growth will slow to 2.0% in 2020 from 2.2% in 2019. It will be 1.9% in 2021 and 1.8% in 2022. That’s according to the most recent forecast released at the Federal Open Market Committee meeting on December 11, 2019.1 The projected slowdown in 2019 and beyond is a side effect of the trade war.

Unemployment

The unemployment rate will average 3.5% in 2020.1 It will bump up to 3.6% in 2021 and 3.7% in 2022. That’s lower than the Fed’s 6.7% target. Some people have been out of work for so long that they’ll never be able to return to the high-paying jobs they used to have. As a result, structural unemployment has increased.

The real unemployment rate includes the underemployed, the marginally attached, and discouraged workers. For that reason, it is around double the widely-reported rate. You can put this report into perspective by viewing the unemployment rates since 1929.

Inflation

Inflation will average 1.9% in 2020.1 It will rise to 2.0% in 2021 and 2022. The core inflation rate strips out those volatile gas and food prices. The Fed prefers to use that rate when setting monetary policy. The core inflation rate will average 1.9% in 2020, 2.0% in 2021, and 2.0% as well in 2022. The core rate is right at the Fed’s 2% target inflation rate. That may give the Fed room to lower interest rates. The U.S. inflation rate history and forecast helps predict the coming years’ inflation levels.

Interest Rates

The Federal Open Market Committee has maintained the current fed funds rate at a range between 1.5% and 1.75% as of its Dec. 11, 2019 meeting.2 It doesn’t expect to increase this interest rate until 2021.1 The Fed is more concerned about promoting growth than about preventing inflation. In fact, it doesn’t see inflation as a threat anytime in the next three years.

The fed funds rate controls short-term interest rates. These include banks’ prime rate, the Libor, most adjustable-rate loans, and credit card rates. You can protect yourself from any rate hikes by choosing fixed-rate loans wherever possible.

The Fed began reducing its $4 trillion in Treasurys in October 2017. The Fed acquired these securities during quantitative easing, which ended in 2014. At the July 31, 2019, meeting, it announced it would stop reducing its holdings.

Since the Fed is no longer replacing the securities it owns, it will create more supply in the Treasurys market. That should have raised the yield on the 10-year Treasury note. This should have driven up long-term interest rates, such as those on fixed-rate mortgages and corporate bonds. Instead, investor concern over global economic volatility has kept rates low.

Treasury yields also depend on the demand for the dollar. If demand is high, yields will drop. If the global economy improves, investors will demand less of this ultra-safe investment.

Oil and Gas Prices

The U.S. Energy Information Administration provides an outlook on oil and gas prices from 2019 to 2050. It predicts crude oil prices will average $60 a barrel in 2019 and $60/b in 2020.3 That’s for Brent global. West Texas Crude will average around $5.50/b less.

The EIA’s energy outlook through 2050 predicts rising oil prices. By 2025, the average Brent oil price will increase to $81.73/b.4 This is a quote in 2018 dollars, which removes the effect of inflation. After that, world demand will drive oil prices to the equivalent of $107.94/b in 2050. By then, the cheap sources of oil will have been exhausted, making crude oil production more expensive.

This forecast does not take into account the effects of climate change. Governments may increase renewable energy production to stop global warming. That would reduce the price of oil significantly.

Jobs

The Bureau of Labor Statistics publishes an occupational outlook each decade. It goes into great detail about each industry and occupation. Overall, the BLS expects total employment to increase by 8.9 million jobs between 2018 and 2028.5

Health care occupations will account for 18 of the 30 fastest growing occupations.5 One reason for that is the aging of the population. Computer and math occupations, and those based on alternative energy production, will also grow rapidly.

Three occupational groups will lose jobs.5 These include production, administrative support, and sales. These jobs are being replaced by computer and technological solutions. Retail sales will also lose jobs, as e-commerce continues to predominate. That shift will also increase jobs in transportation and warehousing.

Climate Change

The Federal Reserve is concerned about how climate change is affecting the economy.6 Research from the Richmond Fed estimated that it will reduce U.S. economic growth by 30% over the next century.

The Fed is also requiring banks to plan for the economic impact of increased extreme weather. For example, it is asking Florida banks to have risk management plans for hurricanes.

Former Federal Reserve Chairs have urged Congress to enact a carbon tax to lower the dangerous levels of greenhouse gas emissions.

Damage from natural disasters, such as hurricanes, floods, and wildfires, was $160 billion in 2018.7 That’s lower than the record $350 billion set in 2017. These disasters killed 10,400 people in 2018 and 13,000 people in 2017. Insurance companies paid out $80 billion in 2018 damage claims and $140 billion in 2017.

These have become worse and more frequent due to global warming.7 There were 850 natural disasters in 2018, compared to only 500 a year between 1988 and 2017. U.S. insured losses were $80,000, double the 30-year average. The industry is frustrated by the lack of action on global warming solutions.

What does this mean for business owners? The US economy in general is slowing, and unemployment in general will be rising a bit in 2020. This means that virtual staffing can be a cost-reduction & business growth solution for you and your business! Take into consideration all your business expenses. How much is your monthly rent for your space, or if you own it, how much do you need for its up-keep? How about equipment? Utilities? Everything that needs to be covered for your employees? How much could you save if you cut down on these? What if we told you that you could both cut-down costs while ensuring that you have a stellar team behind you?

Schedule your Double My Business Strategy Session today and find out how you can hire a talented MyOutDesk Virtual Assistant and what they can do for you and your business!

Original Story: https://www.myoutdesk.com/the-2020-us-economy-and-how-it-affects-you/

Published by MyOutDesk

MyOutDesk is the real estate industry's largest & most trusted virtual assistant staffing company, with over 5,000 clients including half of the top 10 RealTrends 1000 teams. We're located in Sacramento, California, with overseas offices in the Philippines managing a staff of thousands of virtual assistants specializing in real estate administration, transaction coordination, marketing, and inside sales (ISA). MyOutDesk real estate virtual assistants (VAs) work from their fully-equipped home offices in Southeast Asia, which allows us to provide service for over 60% less than the cost of hiring full time staff in the USA - which saves our clients over $55 million dollars a year in expenses.

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