Understanding the Investment Outlook for 2020

For more than a decade, the stock market has been on an upward tick. Investors will encounter a few variables this year, of course, like the eventual United States presidential election. And some will make less than they did last year. That aside, we’ll likely see growth throughout 2020.

Take a look at these predictions before you make your next move.

1. A Recession Is Unlikely

By the end of 2019, many experts thought the U.S. would be safe from a recession in 2020. That sentiment remains true, to an extent. Every year, there’s a 20% chance that a recession will occur — and that figure is up by 8% this month. Part of this increase is due to the recent COVID-19 outbreak. The global economy relies on China, where the virus originated.

But the resolution of the U.S.-China trade war may counteract this, especially as the U.S. maintains a healthy consumer outlook. Investors have also found solace in the U.S. Federal Reserve’s 2019 interest rate cuts. Germany may endure a recession in 2020, but the U.S. remains in the clear as of right now.

2. The Election Will Matter

In November, the U.S. will either re-elect Donald Trump or put a new leader in the White House. This outcome may make a difference in the stock market.

In general, a new presidency normally does, regardless of the political party. The S&P 500 usually sees a boost within the first year of a president’s term. Therefore, you can probably expect to see an uptick soon.

3. Certain Industries Stay Lucrative

Throughout 2020, many of the same industries will remain profitable. Oil will continue to be the world’s largest source of energy for years to come. At the same time, investors should look out for biotechnology and real estate investment trusts. Of course, health care is still one of the best sectors to consider.

While these industries are here to stay, you can expect to see others emerge this year. Healthy junk food alternatives and gun violence prevention are two very opposite enterprises, but both are on the minds of Americans as of late. Sustainability in all forms is on the rise as well. Keep these areas in mind as you think about your next investment.

4. Interest Rates Won’t Rise

We’re likely to stay right where we are when it comes to interest rates. After the Fed made cuts in October, consumers have been able to enjoy more money in their bank accounts. While inflation isn’t off the table, you can rest assured that rates will stay steady throughout 2020.

That said, the COVID-19 outbreak may affect this forecast down the line. For now, though, investors can enjoy current rates as they are.

5. Real Estate Remains Static

More and more consumers, particularly millennials, want to purchase houses. Because of low mortgage rates and an active job market, this push is possible. But developers haven’t constructed enough homes to fill the demand. On a similar note, older residents tend to remain in their houses for more extended periods. We can expect prices to rise in large cities as well.

Still, decreased debt levels give potential buyers more leeway. If properties can re-enter the market, then all should be well. Until then, experts anticipate that the real estate industry will remain static throughout 2020.

6. Consumers Continue to Spend

The unemployment rate in the U.S. remains around 3.5%, which is a 50-year low. As companies continue to hire and gas prices stay low, investors can expect consumers to continue to spend. It doesn’t look like many people will hold back this year unless a shift in one of these variables occurs. But even if this trend doesn’t accelerate, you can rest assured that it won’t come to a halt.

A recession is unlikely, which helps reaffirm this prospect. While some industries have already experienced a decline, you can anticipate that consumers will have money to spend this year. Store-based retail and DVD-rental services are prominent examples in that regard.

Consider These Trends in 2020

Investors can sum this year up in one phrase — and it’s “steady growth.” We won’t see huge gains or collapses. Instead, the stock market will remain the same in general.

Consider these trends in relation to that as you move forward.

Author Bio:

Dylan Bartlett, aka, “The Regular Guide,” writes about a broad variety of topics on his blog. Check out Just a Regular Guide for more, or follow him on Twitter @theregularguidefor frequent updates!

 

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