Cheer not Fear in the New Year

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Global synchronized growth was the buzz phrase in 2017. Global growth divergence was the theme of 2018, with the U.S. economy accelerating while other global economies slowed. Now the latest data is showing a convergence, but unfortunately it is because the U.S. economy is slowing its pace a bit. Manufacturing expanded in December, but declined sharply from the previous month with a reading of 54.1, the slowest pace of expansion since November 2016. This is on the heels of a contractionary manufacturing report from China. Fears of a global slowdown and the possibility of the Fed making a mistake, as well as the government shutdown and ongoing trade tensions are weighing down markets. The fear and pessimism on Wall Street has spilled over to Main Street with consumer confidence dropping in December to the lowest level since July and well off peak confidence levels in October. While there are some reasons for concern, the latest ADP payroll report showed a blowout 271,000 private sector jobs added in December with small and medium sized companies doing the heavy lifting compared to large sized companies. The U.S. economy is still doing fine. A strong employment market, robust consumer spending, falling mortgage rates, low gas prices and still vigorous corporate earnings growth are just a few reasons to greet the new year with cheer not fear.

Please see the Global Perspectives 2019 Forecast: The Storm Before the Calm.

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