U.S. GDP Expected to Grow 2.6% in 2019

U.S. GDP Expected to Grow 2.6% in 2019

After seeing a 3% gain this year, the U.S.’s gross domestic product is expected to grow 2.6% in 2019, according to economists surveyed by Wolters Kluwer Blue Chip Economic Indicators.

Job growth is expected to slow, while wage increases accelerate. Healthy consumer spending is expected to offset slowdowns in business investment growth and the housing market.

Economists say the economy will stay in good shape next year, but they expect it to start slowing down in the coming years, as the effects of tax cuts fade and spending increases. The trade war with China and rising interest rates will also weigh on the economy.

According to economists surveyed by the National Association of Business Economics, the risk of a recession will rise to 50% by 2021.

Job growth is expected to slow down dramatically next year, from over 200,000 this year to 160,000 in 2019. That means that we’ll likely see more job seekers using a professional temporary staffing agency to pay the bills while looking for a permanent position. It’s not that businesses won’t need as many workers; it’s just that a record-low unemployment rate of 3.7% will make it more challenging to find vacant positions.

Economists expect consumer spending to grow by 2.7% next year, as wages continue to rise.

Growth in 2019 will likely be crimped by higher interest rates. The Fed predicts two rate hikes, down from three earlier in the year. That would bring the rate to about 2.9%. While rate hikes will help prevent a spike in inflation, they will also increase borrowing costs on home equity lines, credit cards, auto loans and adjustable-rate mortgages.

The housing market may also be a drag on the economy next year. Investment in building and home renovation has slowed for three straight quarters, as mortgage rates rise and home prices soar.

Spending on housing will likely dip further in 2019, as affordability continues to be a key concern.

Economists have also seen an intriguing trend on the job-front: workers are effectively “ghosting” their employers. In other words, they simply stop showing up for work and cannot be contacted by their employers.

Economists speculate that workers are taking this brazen approach because there are so many job opportunities available. When employees are unhappy, they can simply leave and find another job in days.

The troubling trend may help job seekers as job growth starts to wane in the coming years.

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