We partner with our broker-dealer LPL Financial for a number of reasons, one of which involves the excellent investment research they provide our office.
Recently, LPL Research released their 2020 economic and market forecast titled Outlook 2020: Bringing Focus to the Markets. If you have some time, check it out. Otherwise, here's a summary of LPL's financial forecasts for 2020:
Economy
- DOMESTIC ECONOMY: We are expecting 1.75% U.S. GDP growth in 2020. Our forecast reflects the potential for continued trade uncertainty and weak business investment, but a steady consumer.
- GLOBAL ECONOMY: Europe and Japan continue to struggle with trade uncertainty, geopolitical concerns, and sluggish growth. We anticipate more opportunities for growth in emerging markets’ economies, with countries outside China playing a growing role.
- INFLATION: Consumer inflation has picked up slightly, and we believe inflation will continue to grow at a healthy but manageable rate.
- EMPLOYMENT: U.S. job growth has been steady, although recently it has started to show signs of moderating. Some cooling down would be expected at this point in the economic cycle.
- RECESSION: Prolonged trade uncertainty and a highly charged U.S. election season lead us to believe that recession starting in the fourth quarter of 2020 or first quarter of 2021 could be possible, but we don’t think it’s probable.
Bonds
- Short-lived and shallow yield curve inversions are not worrisome in our view, and we continue to emphasize a blend of high-quality intermediate bonds in tactically oriented portfolios.
Stocks
- We look for solid U.S. equities performance to continue, and we see more potential upside in emerging markets than developed international markets. In the U.S., we continue to prefer large cap stocks (over small cap stocks), cyclical stocks (over value stocks), and a balance of growth and value styles for appropriate strategies.
As we look forward to the year 2020 and a new decade, these will be some key trends to keep an eye on. We can't see into the future, but we hope this guide can help improve your view into the new year.