Uds overhang ic expansion
ouse. “Keep the faith. omy.” h of the world’s major two years was broadly ble recovery from the Yet few economists saw sustainable – or even al years. t a prolonged global e inflation or speculawould inevitably send es into a downturn. hallenge, the world’s ed more than ever e and investment – to re in one major nation the globe. redicts that the growth y, as measured by its uct, will slip from 3.1 2.8 per cent in 2019. nough to crimp corpoess investment, Cooper erican and European uldn’t feel the pain, he said, in part because of a resilient job market and lower oil prices.
“2019 is still going to look pretty good – your job is going to be safe, and your wages are going to rise,” Cooper predicted while adding that he thinks the slowdown will worsen in 2020.
Waves of stock selling
In the meantime, though, stock markets have endured waves of jittery selling as investors have tried to factor in a slowdown that could depress the growth of company profits.
“Financial markets have become a little more volatile and anxious of late, worried about slowing global growth, trade tensions, Brexit woes, and concerns that the US may not be able to sustain its current cyclical sweet spot,” said Josh Feinman, chief economist at Deutsche Asset Management.
Over the next two years, most forecasts suggest that US growth, after cresting above three per cent this year – its best performance since 2005 – will weaken. Fed Chair Jerome Powell acknowledged in a speech last week that the strong worldwide growth of 2017 is in retreat.
“You see signs of a gradual slowdown,” Powell said.
Goldman Sachs foresees annual US growth slowing to 1.75 per cent by the end of 2019. The predicted weakening stems, in part, from the front-loaded stimulus of the tax cuts Trump pushed through Congress. The boost from the tax overhaul is expected to wane by 2020.
One continuing threat for the US economy is Trump’s trade war with China. The president has imposed a 10 per cent tax on US$200 billion of Chinese goods — a tariff that’s set to