The economic outlook

Jan. 23--ARCHDALE -- Amelia Hopkins is not a prognosticator, nor did she bring a crystal ball to Coffee and Conversation held last week at Guil-Rand Fire Department to predict what the economic climate will be like in 2019. There was no magic or voodoo, but instead hard economic data that drove the predictions the retired investment professional and lecturer with the Bryan School of Business and Economics shared. To the relief of nearly 50 people who showed up to listen, she predicted that the current trend of economic expansion will not end anytime soon.

Now reaching 114 months, the

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United States economy is well into the second longest period of economic expansion since World War II.

"There are some who are calling the current expansion 'long in the tooth,' but I personally do not believe that economic expansion has to die of old age," Hopkins said. "There are indications that it will continue well into 2019."

Some of Hopkins' data included U.S. Gross Domestic Product, which had dipped down below 1 percent in the final quarter of 2015. One of last year's economic high points was when the GDP topped 4 percent in the second quarter of 2018.

Notable data for the 2018 year also includes an unemployment rate that dropped to 3.7 percent in September, its lowest level since the Great Recession, when it skyrocketed to 10.2 percent in November 2009.

Hopkins does not expect the Feds to issue as many interest rate hikes in 2019 as last year. As an indication of their confidence in the U.S. economy, in December 2018 the Federal Reserve raised short-term interest rates by a quarter of a percentage point to a range of 2.25 to 2.5 percent, which was the ninth increase since the end of 2015. That's still low from a historical standpoint, but it's the highest that rates have climbed since the financial crisis a decade ago.

The inflation rate for 2018 was 1.9 percent, down from 2.1 percent for 2016 and 2017. Falling gas prices served as fuel for consumer confidence. At the close of 2018 some drivers were filling their tanks at less than $2 per gallon.

According to Hopkins, the U.S. economy in 2018 was still the strongest in the world with $19.39 trillion in business, amounting to just under 25 percent of the world market. China follows the U.S. with 15.4 percent doing $12.24 trillion in business.

International factors that could put pressure on the U.S. economy in the coming year include an economic slowdown in China and uncertainty in the Eurozone with the U.K. exit from the EU. In addition, Japan just increased their consumption tax, Australia's economy grew more slowly than expected, with forestry and agriculture actually declining within the past year, and the EAFE (International developed market equities) lost 14 percent in 2018.

This slowdown in the rest of the world will lead to a softer demand for U.S. goods.

These risks do not make the outlook for global growth necessarily grim, however, 2019 could be another year of solid growth, albeit slower growth.

Hopkins said it would be tricky to forecast the coming year.

Factors to consider include the Federal Government shutdown, new leadership in the House of Representatives, a roller coaster stock market, and concerns over the pace of Fed tightening on the U.S. economy.

In looking at equities, the investment market looks attractive, with the S&P 500 trading at only 14 times next year's earnings. All 10 of the top Wall Street major investment firms project high S&P 500 returns in 2019.

In looking at trucking and rail time indicators, these show no indications of a recession.

Factors that could affect the 2019 climate include local population trends.

Randolph County demographics include an ageing population in which fewer individuals are working, a downtrend in the birth rate and immigration.

Hopkins feels that in the coming months, the effects of fiscal stimulus will begin to fade. Economic growth may be hindered with the difficulty in hiring and retaining qualified personnel.

Overall, the 10 leading economic indicators (10 components of the macroeconomic status) are still on uptrend.

Hopkins concluded with the sentiments: "Best wishes for a safe and prosperous 2019."

Staff writer Debbie Hightower may be reached at [email protected] or 336-888-3576.

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