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Page 11 ASSOCIATIONINSIGHT Portable Sanitation Association International News BIWEEKLY EDITION JANUARY 8, 2020 The Economic Outlook …continued from page 2 Those not in the "it will get better" camp cite various reasons for their concern. Discerning what economic indicators portend is a lot like reading tea leaves—imprecise and as much art as science. Even so, it is worth looking at the data having the greatest likelihood of impacting portable sanitation to give ourselves the best chance of seeing whatever is coming long before it hits us. Factors Impacting the 2020 Economy There are numerous factors that affect the US economy as noted below. Taken together, these factors support the premise that the 2020 economy will be slower compared to 2019. If something significant happens that affects any one of these areas for better or worse, a ripple effect will occur in related areas, either elevating or depressing these predictions. • Consumer confidence evidenced in consumer spending is the single most significant economic indicator, accounting for about two-thirds of US economic activity. How consumers behave with their money can be seen as a "canary in the coal mine." As of early January, most sources expect consumer spending to gradually drop off in 2020 before possibly rebounding in 2021. As of the first week of January 2020, the Conference Board reports that this important measure has remained "relatively constant over the past four months." The Board notes, though, that while overall confidence is still comparatively high, consumer outlook on the future economy has recently weakened due to worries about income growth and financial insecurity. Wages did not rise much in 2019, and many people work multiple jobs. According to a report cited by Deloitte, 40% of American adults would have to borrow money or sell something to deal with an unexpected expense of $400. Consequently, consumers are sensitive to perceived threats to their income stability and feel they have few options for increasing their earnings. If consumers keep spending, the economy can ride out various bumps; if they get spooked and pull back, the impact on other areas can make things worse in a hurry. • Interest rates are likely to remain stable in 2020, making borrowing costs predictable for consumers and businesses. In December the Federal Reserve signaled that it expects to hold rates steady in 2020, only considering an increase if inflation rises above 2% which is seen as unlikely. If the economy stumbles, the Fed may reduce rates which has led to a rebound in the past. • Tariffs are a wild card that impact sectors driving construction and consumer spending. While the White House has announced a preliminary trade deal with China and the USMCA is likely to become law in 2020—both of which should boost the economy—the timing and ultimate impact of these things is unknowable. Mr. Trump has not always been predictable in his approach to tariffs either, so there could be surprises this year. It is unlikely any surprises of the President's choosing would negatively impact the economy and, by extension, his re-election. However, surprises over which he has little control resulting from other nations' actions cannot be ruled out. …Continued on page 14