U.S. Economy on Uncertain Footing but far from a Recession

In 2019, the U.S. economy got off to a slow start which has sparked concerns that it’s headed for another recession. Experts say this is unlikely and that growth will likely pick up speed in the spring, as it typically does.

 

This slow growth can be attributed to the lack of tax cuts or spending increases this year. But there are other issues causing uncertainty in the marketplace.

Dow Drops Largely Due to Boeing

Many people look to the Dow Jones Industrial Average (DIA) to gauge how well the market is performing. The Dow dropped last week, mostly due to Boeing’s stocks dropping over 10%.

 

The company shares fell after the tragic and unexpected airlines crash involving an Ethiopian Airlines 737 Max 8 jet. The company’s shares continued to drop as questions about the crash began to intensify.

 

This affected the Dow heavily because Boeing’s weight in the Dow is higher than any other company listed. Boeing represents a 9.9% weight, higher than Facebook, Netflix, and Google.

Uncertainty over U.S.-China Trade Deal

Recently, stocks have fallen flat and the volume is the lowest it’s been since Black Friday. Investors appear to be in a holding pattern and some speculate it’s because they’re waiting on a trade deal between the U.S. and China.

 

It’s hard to anticipate when a trade deal will be finalized, especially since Trump recently stated that he’s in “no hurry” to complete a trade deal.

 

A major holdup between the two countries has been Trump’s insistence that any deal includes intellectual property protection. The President did indicate that a deal could be forthcoming, though he declined to say when.

 

And given the Trump administration’s unpredictability, it’s hard to know when this will take place. At the White House, Trump told reporters, “I think things are going along very well — we’ll just see what the date is.”

Plan for Continued Economic Growth

In spite of the Dow’s recent drop and uncertainty regarding a trade deal between the U.S. and China, financial experts are optimistic about future economic growth. Though it’s unlikely to grow as quickly as it did in 2018, there are several things to be optimistic about:

 

  • Wages continue to rise by more than 3% per year.
  • The Fed declined to raise interest rates so consumer rates are at an all-time low.
  • The U.S. is enjoying a historically low 3.8% unemployment rate.

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