Outlook 2020 Offers Insights Into Next Year’s Financial Markets

LPL Financial’s Outlook 2020 Predicts Year of Economic Growth

LPL Financial released its end-of-year, conclusive prediction of next year’s economy in its Outlook 2020: Bringing Markets into Focus. The economy is predicted to continue its upward trend due to a number of positive factors, including trade negotiations, strong consumer spending and consumer inflation. In contrast, a possible recession colors this growth, which would start in the fourth quarter of 2020. Investors must be keen about staying atop the latest developments this upcoming year. Read the full publication for more insight into the conditions that may nurture this capricious market.

U.S.—China Trade Uncertainty Complicates the Economy

Trade uncertainty will be one of the leading factors in market changes. Ongoing trade tensions between the U.S. and China have caused international trading to slow in growth. Further, trade is conditional on both current policies and eventual 2020 candidates, who may or may not make changes to the tariffs. Trade is uncertain, especially in the manufacturing sector. The ISM states that manufacturing reached a ten-year low in 2019, reflecting the global manufacturing market’s similarly steep decline. However, predictions point towards boosted growth as the election—and changing policies—may spawn trade negotiations. Continuing progress may benefit stocks, a possible catalyst for increased capital investment.

Consumer Spending Propels Strong Economy

Consumer spending, which comprises 70% of the American economy, will guide the market towards prosperity in 2020. While the growth of consumer spending is unlikely to match that of 2019, we’ll continue to see an upward trend. Additionally, a 2% growth in consumer inflation indicates that the economy is growing at a healthy rate. Consumers are more likely to make immediate purchases as prices climb. Combined with a low unemployment rate that sits at a mere 3.6%, consumer spending will continue to dominate in 2020.

Recession Threats Loom

Experts warn of a possible fourth quarter recession or at the start of 2021. Sustained trade uncertainty combined with a potentially complex election season may trigger economic decline towards the end of 2020. However, LPL Financial suggests that a recession is unlikely to occur. Still, investors should remain cautious and keep watch for a changing market.

What it Means for Investors

The 2020 financial market will likely be off to a strong start. Your investment strategy should be mindful of changing policies as part of the 2020 election and trade uncertainty. Clarity on trade continues to be vital for investors, as conditions remain uncertain. While some predict a slight chance for a fourth quarter recession, its low probability may not be a significant factor in your investment strategy since strong consumer spending will likely drive a flourishing economy.

Investors should contact a financial advisor before making any decisions. Please consult with our financial planners at Harvest Wealth Partners for a better understanding of your investment options. Get in touch with us today.

IMPORTANT DISCLOSURES 

The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. The economic forecasts set forth in the presentation may not develop as predicted. This research material has been prepared by LPL Financial LLC.