Economic Forecast for 2020-2021 is one of Moderate Growth

By January 15, 2020Interesting Facts

The 2020 U.S. economic outlook is healthy according to the key economic indicators.

Thanks to continued job growth and an uptick in construction and home building, there will be no recession in 2020 according to the Chapman University Economic Forecast.

Positive Factors for this prediction

  • Wealth: Higher Incomes- Wages up 3.5%
  • Employment growth: Above 1%
  • Household Debt as a % of Disposable income: 9.7% – Down 3.5% from 2008
  • Consumer Spending: Up 2.5%

Negative Factors

  • Investment Spending: Less than 2%- down 5% from 2018
  • Interest Rate Spread: 10 year T-Bond Rate less Fed Fund Rate is less than 1%
  • Tariff War: Risky and Unpredictable
  • Manufacturing: Down in US, Japan, China and Europe
  • Global Economic Growth: Weak overall

According to Raymond Sfeir, Director of the Anderson Center for Economic Research; The U.S. economy will see a 1.4 percent rate of job growth and a 6.2 percent rise in housing construction.

Also Among the Forecast’s Predictions:

  • The median price of single-family homes will rise 3.9 percent.
  • Mortgage rates will remain steady at 3.8 percent.
  • Housing starts will grow 6.2 percent.
  • California’s trade with China will show a 14% plunge to $153 billion this year from $178 billion in 2018

Meanwhile, California as a whole will face some other unique challenges. The baby boomer generation aging and leaving the workplace and there has been a huge migration of residents to other states. The trade war’s disproportionate impact on California have put the state’s growth on parity with the U.S. California’s been hit harder than the rest of the nation because California is an important distribution point both for import and export services and manufactured products.

Orange County home sales will pick up next year after a decline in 2019, while single-family housing prices will grow at a hefty 3.2% rate and residential permits are expected to grow at a healthy 9% in 2020, exceeding the numbers of 2018 and 2019. Median single-family housing price will increase at a 3.2% rate in 2020 compared to 0.2% in 2019.

The sharp drop in mortgage rates in 2019 is leading to a pickup in home building and home sales,” according to the Chapman experts. “That pickup is gaining some forward momentum as we move into 2020.”

Orange County’s employment growth rate will dip to 1.1% next year, well below California’s 1.5%, while this year’s weakness in the construction industry hindered employment in the financial, professional and business sectors.

Throughout its 42-year history, the Chapman University Economic Forecast has achieved an unusually high standard of accuracy. Business people and investors on local and national levels, faithfully watch the reports for economic insights to help guide their business plans for the coming year