Ominous Signs In the 2020 Economic Forecast

2020 Economic Forecast

\The stock market is booming as 2019 ends; however, that doesn’t necessarily mean that the national and world economies will be booming in 2020. Many economists are seeing some ominous signs in the financial landscape, and savvy investors are wise to take notice.

Wealth inequality

The growing inequality between the rich and poor is a political issue that 2020 United States presidential candidates including Bernie Sanders and Elizabeth Warren are focusing on. It’s also an economic issue because too much of a gap does not bode well for security in general and consumer spending in particular. Furthermore, this is a problem that looms large in any economic forecast for at least the next decade because the inequality is not likely to disappear any time soon.

Political uncertainty

In the United States, there is currently uncertainty about whether President Trump will be impeached and removed from office. In the United Kingdom, it’s not clear if and when Brexit will actually happen. In short, the market does not have a clear indication of how these situations will play out, so investors are hesitant to commit capital, and corporations are reluctant to make major commitments.

Furthermore, Wall Street may find itself on a very different playing field if one of the more progressive Democratic candidates gets elected. Warren and Sanders, in particular, have talked a great deal about taxing Wall Street in general; it’s possible that major corporations can roll with these changes, but there’s no way to know yet if they will actually occur. Tech regulation, in particular, is an area of intense concern as candidates talk up the possibility of taking on the tech giants.

Another potential problem is that troubled by political uncertainty in the United States, foreign investors may no longer be investing as heavily in United States credit and treasuries. The implications of a Warren or Sanders presidency, in particular, would mean major changes to regulations, taxes and other factors that determine whether investors in Europe, Asia and elsewhere look to the United States as an arena to put their money into.

What’s more, the debt of the United States government has long been high, and, following the recent cuts in corporate taxes, has gone even higher. This is simply an unsustainable situation for the world economy because the United States government is such a major influence.

Trade tensions

While the ongoing trade war between the world’s two largest economies – the United States and China – has shown signs of lessening, it is not certain that the conflict will be resolved any time soon. President Trump has indicated that he’s willing to negotiate; he’s also said, in effect, that he’s not ready to back down.

The truth is that Trump’s policy is a major factor in the decisions corporations make about spending, and there is just not enough information at the close of 2019 to make major calls. The result could be economic stagnation in both the United States and China.

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