2020 Economic Forecast

Published Thursday, November 21, 2019

Advisors from the IU Kelley School of Business provided their 2020 Forecast at the November 15 Business Outlook Panel at IU South Bend. According to the panel, the economic expansion will extend into its 12th year in 2020, although with slower growth than in 2019. According to their forecast:

  • The overall U.S. economy (GDP) will grow at about 2% in 2020. However, risks to this forecast are mostly to the downside.
  • Employment will continue to expand, but growth will decelerate.
  • Unemployment will hold steady, ending 2020 below 4%. A tight labor market will continue for business.
  • Inflation will rise from 2019 and will end 2020 close to the Federal Reserve’s 2% target.
  • For business investment, 2020 will be another year of weak growth. However, the U.S. housing market will be better than in 2019 and consumer spending will decelerate.
  • Energy prices will be relatively stable.
  • Global growth is projected at 3.4%, with downside risks continuing to build.
  • Fears about China's economy are shaking global markets as 2020 Chinese growth is expected to fall below the symbolic 6%. In Japan, there is mounting public debt in an aging society, which should remind policymakers of the downside risks of their accommodative policies.
  • Ongoing trade disputes are eroding business and consumer confidence, and could become a drag on consumption, investment and growth.
  • We expect Indiana's economic output to grow at a rate of about 1.25% in 2020 amid mixed leading indicators.
  • Unemployment rates across the state will continue to stay at or below full employment through 2020.
  • Job creation in Indiana will decelerate.
  • The manufacturing contraction will produce quicker deceleration in output, given Indiana's reliance upon manufacturing employment opportunities. 
  • Expectations that U.S. vehicle sales will experience a drop of around 2% will affect the Indiana economy next year, causing overall economic output in Indiana to lag that of the nation.