The year to date has run hot and cold. Trade tensions, the growth outlook, employment and asset prices have all been volatile. The past month offered several reasons for cheer, but we have become conditioned to bracing ourselves for the next wave to come.

The agreement between Presidents Trump and Xi to resume trade negotiations, defer threatened tariffs and resume purchases of U.S. agricultural exports was a positive step. Trade escalations will hopefully stay out of the headlines for a while, but a lasting deal is far from complete. In the interim, U.S. companies still find themselves in limbo as they attempt to invest and manage their supply chains.

This does not provide the firmest ground for a constructive outlook on the economy. There is no recession in our forecast, which includes our first look at 2020. But downside risks still predominate.

Key Economic Indicators

US Economic Outlook - July 2019 Chart

Influences on the Forecast

    • In June, the U.S. economy added 224,000 jobs. The report ended concerns that the weak job creation observed in May was the start of a trend. The unemployment rate increased slightly to 3.7%, driven by a positive force: an increase in labor force participation. Wages continued their steady climb, growing by 3% year-over-year.
      • Initial jobless claims are holding at a four-week moving average of around 220,000, a low level not seen in 50 years. The labor market is often an early indicator of economic trouble, and it is not yet giving cause for alarm.