These Top Catalysts Will Drive Economic Growth in 2020

Goldman Sachs sees a pickup in economic growth in 2020.

Analysts see GDP growing to 2.3% early in the year, averaging 2.1% for the full year. All based on lower interest rates, tariffs, and inventory cycle recovery, as highlighted by Yahoo Finance.

Analysts believe lower rates will lead to looser financial conditions.

“Our economists estimate that the peak GDP tailwind attributable to easing financial conditions occurs with a lag of roughly three quarters,” the analysts, led by chief U.S. equity strategist David Kostin wrote.

Analysts do not expect to see an escalation of trade tariffs.

“We believe that tariffs on imports from China have likely peaked,” wrote the bank’s chief U.S. political economist, Alec Phillips.  Plus, “we expect that tariffs on imports from China will remain at current levels through 2020.”

Analysts are also confident about an inventory cycle recovery.

“Our colleagues believe the manufacturing rebound, strong credit conditions, and continued consumer demand create favorable conditions for a rebound in the inventory cycle. In the October [National Federation of Independent Business] survey, the net share of small businesses planning to add to inventories recorded its highest reading since last year.”

Then again, many on Wall Street believe markets could do quite well in the New Year.

In fact, many believe U.S. economic growth could again accelerate above 2% thanks to interest rate cuts, and stronger consumer spending. 

“If you look at the incredible U.S. economy and how well it had done, it’s certainly reflective of what is happening in the stock market. What the stock market is telling us is that the economy will continue to do well,” says Mobius Capital Partners Mark Mobius, as quoted by Yahoo Finance.  “Barring any major incident in the administration and assuming that Trump stays in the presidency I think the stock market will do very well and the economy will do well.”