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The U.S. economy is expected to continue its slowdown in 2020, but probably not slip into recession as continued strong consumer spending and a mostly strong jobs market stand to offset continued uncertainty over issues including trade, impeachment and the outcome of the next presidential election.

Despite returning to slower growth, the U.S. economy “should avoid recession in 2020,” according to J.P. Morgan’s Market Insights Investment Outlook for 2020.

In addition, none of the three economists at Capital Group who spoke at that firm’s first economic outlook event for reporters, in New York Dec. 5, predicted a U.S. recession in 2020, either.

But several economists and other industry experts said a suddenly ramped-up trade war between China and the U.S. and Bernie Sanders or Elizabeth Warren potentially winning the next presidential election with ultra-progressive policies could be among the black swans that push the U.S. economy into a recession. There’s largely agreement, however, among those experts that the trade war won’t ramp back up in the next year and that even if Sanders or Warren won the election, he or she would face an uphill battle in Congress to pass their signature proposals.

While many experts do not seem to think a U.S. recession is likely in 2020, Matthew Miskin, co-chief investment strategist at John Hancock Investment Management, predicted the chance of a recession is as high as “50/50.”

However, speaking to reporters during a recent briefing in New York, Miskin conceded of his recession forecast: “I think that is relatively high, versus what the Street probably is forecasting.”

Nevertheless, “we do believe that the yield curve still holds merit” and, in general, the “leading economic indicators suggest we’re not out of the woods yet, and so we think it could be a coin flip” whether we end up in a recession or not. And that will be “dictated from” what the Federal Reserve does with rate moves, he predicted.

The U.S. economic expansion, now in its 10th year, became the longest ever recorded in 2019. And the consensus seems to be it is only a matter of time before there is a recession, although it probably won’t be in 2020.

Meanwhile, although U.S. unemployment has continued to be a positive, there isn’t much more that can be expected to improve on that front because we’re already nearly at what’s generally considered full employment — even if many of those employed have to work more than one job to earn a living wage.

The U.S. economy “likely will remain bifurcated — at least to start the year — with beleaguered manufacturing and business investment, but healthier services and consumer spending,” Liz Ann Sonders, chief investment strategist at Charles Schwab, said Dec. 16 in her 2020 outlook report.

“Easy monetary policy should carry over to 2020,” she said, but warned, “it isn’t the elixir to ongoing trade and political uncertainty.” On a positive note, however, she said the recently announced “Phase One” trade deal between China and the U.S. “could help stabilize manufacturing/business investment.”

Like Sonders, Jared Franz, an economist at Capital Group who focuses on the U.S. and Latin America, told reporters at his company’s press event that he sees a tale of two economies in the U.S., where retail sales and industrial production are diverging. We’re already seeing a “mini-cycle” in the U.S., where the industrial part of the economy has slowed, but the broader economy, including retail, is fine, he said. While there’s some “momentum” in the economy entering 2020, “it’s going to be nothing like the big momentum that we had in 2016,” he told reporters. One reason why is because he predicted we likely won’t be seeing the Fed cut rates like we saw in 2019.

The forecast for U.S. GDP growth in this late-cycle expansion, meanwhile, is weaker than the 2.3% to 2.9% that had been projected by many experts for 2019. LPL Financial research analysts are projecting 1.75% growth for 2020, reflecting the ongoing China-U.S. trade dispute and “increased odds of recession in the latter months of 2020 or early 2021,” it said. Bank of America Merrill Lynch predicted U.S. GDP will “slow to trend, with growth averaging 1.7% over the next two years.” Wells Fargo Securities Economics Group is projecting 1.8% U.S. GDP growth.

LPL continued to “emphasize a blend of high-quality intermediate bonds in tactically oriented portfolios for fixed income allocations,” it said in its outlook. “Despite expectations of modestly higher long-term rates (which can push bond prices lower), the ‘coupon’ income that bonds provide would still leave the broad Bloomberg Barclays Aggregate Bond Index with the potential for low-single-digit gains while providing likely diversification benefits if stocks falter,” it said.

Until there was “more clarity on trade,” LPL said it wouldn’t expect 2020 corporate earnings to improve significantly from 2019 levels. But the firm said “prospects for better earnings growth in 2020 will help support stocks in current valuations.”

Wells Fargo analysts remained “comfortable that, overall, U.S. companies can weather the economic slowdown and increase their earnings again in 2020,” the company said in its outlook. Their “low-return outlook” for the U.S. equity markets indicates that the “bull market is likely to remain intact but slow” in 2020, the company said. Wells Fargo was neutral on U.S. equity classes, but said it had an “unfavorable view” on U.S. small-cap equities.

Wells Fargo sees “opportunities for attractive yields and modest price returns in most equity asset classes,” while favoring “opportunities to add quality and growth in our favored” U.S. sectors, which include consumer discretionary, financial and information technology firms, it said.

Offering one of the more optimistic forecasts for 2020 overall is Hennessy Funds, which expects GDP growth of about 2.5%.

The bull market is “not over” yet, according to Neil Hennessy, its chairman, chief investment officer and portfolio manager. What’s happening is that people are “paying way too much attention to the noise,” he told reporters at the firm’s annual market outlook event in New York. And, by noise, he was referring to issues including impeachment, tariffs, taxes, the 2020 U.S. presidential election, interest rates and fear of inflation.

All of that “noise,” at the end of the day, “has nothing to do with the fundamentals of the companies in the stock market,” Hennessy said. And there’s still “tons of cash” out there “sitting on the sidelines,” including $5.3 trillion in bond and mutual funds, as well as $3.5 trillion in money market funds that are all “earning virtually nothing” now. There’s also $5.2 trillion in cash and marketable securities on the balance sheets of S&P 500 companies, plus $1.7 trillion in cash and marketable securities on the balance sheets of Dow Jones firms, he said.

And yet the economy, while “not robust,” he conceded, is “still growing.” Although consumer confidence is admittedly “waning,” it’s still “very strong,” while corporate profits are up and growing, unemployment is at a “50-year low” and the banking system is the “strongest it’s ever, ever been,” he also said.

Also pointing to the trillions of dollars in cash that are being sat on in the market, Sandy Villere, partner and portfolio manager at New Orleans-based RIA Villere & Co., told ThinkAdvisor, “we could have another 12 months of runway” for the bull market to continue. Black swans, however, could include an escalated trade war that gets out of control, although he guessed that President Donald Trump will not “ramp up” the battle “any more than he needs to” because he wants to be re-elected.

Active traders’ top concern for the U.S. equities market, meanwhile, was U.S.-China trade issues, according to a Charles Schwab Active Trader Pulse survey of 300 active traders who make equity trades 36 or more times a year, Schwab said Dec. 10.

That was one week before the two sides declared a 90-day truce in the trade battle. Thirty-two percent of the traders surveyed cited ongoing trade issues between the two countries as their top concern, Charles Schwab said. That was far ahead of the political environment/government gridlock (15%), the strength of the U.S. economy (14%), the prospect of approaching the start of a bear market (12%) and uncertainty due to increased market volatility (7%).

— Check out Rules for ETFs Will Change in 2020 on ThinkAdvisor.