Published On: Thu, Apr 4th, 2019

America’s fiscal future to remain healthy, say cautious forecasters

Predicting the financial future of any enterprise, from a mom-and-pop store to a global corporation or even the most powerful nation on Earth, is much like weather forecasting. Reliability can always be knocked off track by sudden changes.
Those of us invested in jobs, enterprises, industries and governments depend on a relatively stable and healthy bottom line for America, now and in the future, always keep our fingers crossed that the nation’s fiscal condition does not dip too low.
We have seen extraordinary accomplishments during the Trump administration, and have faith that these will continue. But anti-Trump foes are already lining up for the 2020 presidential election – opponents who are not above proposing ludicrous ideas or concocting fictional stories to make the sitting chief executive seem malevolent.
After doing some economic research, we happened to find spot-on quote from Kimberly Amadeo, a financial writer for thebalance.com., summarizing the status of our nation’s fiscal plateau in just a few words: “The GDP (Gross Domestic Product) growth rate is expected to remain between the 2 percent to 3 percent ideal range. Unemployment is forecast to continue at the natural rate. There isn’t too much inflation or deflation.”
Her conclusions seem to favor a comfortable future for America in the coming years, even the decade ahead. But she does offer some less-heartening data that warns about the future, but doesn’t create panic.
At least one organization, The Conference Board, agreed with her that there is reason to believe the future will be stable, if not increasingly productive. In a report issued in March 2019, the board said: “New GDP data show that after growing at a nearly 4 percent pace during the middle of 2018, growth slowed in the final quarter of the year to 2.6 percent. Still, this figure is well above the U.S. economy’s long-term 2 percent trend.”
“During 2019, expect growth to slow further, as effects from fiscal stimulus measures wane, but do remain above the trend through the end of the year.”

Amadeo comes up with some bullet-point assessments of topics near and dear to the financial situation of America:
• U.S. GDP — Growth will slow to 2.1 percent in 2019 from 3 percent in 2018. It will be 1.9 percent in 2020 and 1.8 percent in 2021. (According to the most recent forecast released at the Federal Open Market Committee meeting March 21, 2019)

• Unemployment will be 3.7 percent in 2019, increasing slightly in 2020 and reaching 3.9 percent in 2021. That’s lower than the Fed’s 6.7 percent target. But former Federal Reserve Chair Janet Yellen said a lot of workers are part-time and would prefer full-time work. She admitted that the so-called “real” unemployment rate is more accurate. It’s double the generally reported rate.

• Inflation will be 1.8 percent in 2019. It will rise to 2 percent in 2020 and 2021. The Fed prefers to use that rate when setting monetary policy. Fortunately, the core rate is at the Fed’s 2 percent target inflation rate. That gives them room to raise interest rates to more normal levels.

• U.S. manufacturing is forecast to increase faster than the general economy, with growth estimated at 3.9 percent this year, 2.4 percent in 2020 and 1.9 percent in 2021.

• The Federal Open Market Committee raised the current fed funds rate to 2.5 percent Dec. 19, 2018 and doesn’t expect to increase it again for the foreseeable future. That’s a big change from the Fed’s December forecast. At that time, it expected to raise the rate to 3.0 percent in 2019.

• Jobs – Overall, the Bureau of Labor Statistics expects total employment to increase by 20.5 million jobs between 2010 and 2020. While 88 percent of all occupations will experience growth, the fastest pace will occur in healthcare, personal care and social assistance, and construction.

• Oil and gas prices — The U.S. Energy Information Administration provides an outlook from 2019 to 2050. It predicts crude oil prices will average $61/barrel in 2019. West Texas Crude will average around $7/barrel less.

• World demand will drive oil prices to the equivalent of $114/barrel in 2050. By then, the cheap sources of oil will have been exhausted, making crude oil production more expensive.

• 2019 will experience subdued economic growth, although a recession is unlikely. The effects of President Trump’s tax cuts have led to increased stock buybacks.

Ms. Amadeo presented the following conclusion that should calm the worriers and give those concerned about glitches in the coming monetary picture a suggestion to soothe the soul:
“The best thing to do is to stay focused on your financial well-being. Continue to improve your skills and chart a clear course for your career. If you’ve invested in the stock market, be calm during any pull-back. Plummeting commodity prices, including gold, oil, and coffee, will return to the mean. All in all, an excellent time to reduce debt, build up your savings and increase your wealth.”

About the Author

- My name is Carlo Barbieri, an entrepreneur, civic activist and a leader of many organizations associated with Brazil. A native of Brazil myself, I am currently the CEO of Oxford Group, a firm composed of many international consulting and trading companies. I am also a founding member of the Brazilian Business Group and founding member and Past President of the Brazil Club. In addition, I serve as a Board member of the Deerfield Chamber of Commerce. I have served as a member of the Florida Chamber of Commerce and the Florida Brazil Partnership. Past President of the Rotary Club – Boca Raton West for the 2014-2015 term, I have also been Vice President and Professor of 2Grow – Human Development. An Ambassador of Barry University in Brazil, I am the former President of the Black Fire Bull Steak House. I have also presided over a number of organizations such as the Brazilian Association of Trading Companies (ABECE), Brazil-China Chamber of Commerce in São Paulo, Brazil-Australia Chamber of Commerce, Brazil-Dominican Republican Chamber of Commerce; director of the Trade Center of the State of São Paulo, Brazilian Association of Freight Forwarders and Brazilian Association of Banks. I was also a local Council member for the Consulate General of Brazil in Miami, for the 2013-2017 term.

Leave a comment

XHTML: You can use these html tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>