Ten charts illustrate the macroeconomic trends most likely to shape Fed policy and investment performance in 2020 and beyond.

Scott Minerd, Chairman of Investments and Global CIO, and Guggenheim’s Macroeconomic and Investment Research Group analyze the 10 macroeconomic trends likely to shape monetary policy and investment performance this year.

Among our major themes:

  • Household net worth gains will continue to support consumption, the main driver of growth for the U.S. economy, even with business investment contracting and the manufacturing sector experiencing a recession.
  • The housing market will contribute positively to U.S. economic growth. Mortgage rates have come down a full percentage point over the past year, helping home sales and construction recover, a trend which will continue into 2020.
  • We forecast the Federal Reserve balance sheet, which has been a key driver of markets in recent years, will grow at a much slower pace in 2020, which could undercut the “QE-lite” market narrative.
  • A tight labor market will further depress corporate profit margins in 2020. In an environment of limited pricing power, businesses are struggling to pass on higher labor costs, resulting in declining profitability that should weigh on hiring and investment plans.