US Economic Outlook for 2020 and Beyond

Experts Forecast Steady Growth

economic outlook
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The U.S. economic outlook appears healthy according to the key economic indicators. The most critical indicator is the gross domestic product, which measures the nation's production output. The GDP growth rate is expected to fall below the 2% and 3% ideal range. Unemployment is forecast to continue below the natural rate. There isn't too much inflation or deflation. That's close to a Goldilocks economy.

Economic indicators tell you what's already happened, not what the future holds. The COVID-19 coronavirus will have a negative impact on the economy. The disease is spreading so fast that the impact has not yet shown up in economic indicators.

President Donald Trump promised to increase economic growth to 4%. That's faster than is healthy. Growth at that pace leads to overconfident irrational exuberance. That creates a boom that leads to a damaging bust. The factors that cause these changes in the business cycle are supply, demand, capital availability, and the market’s perception of the economic future.


Over the next several years, the economy will grow more slowly. Reports released before the COVID outbreak said both unemployment and inflation would remain low.

Economic Growth

U.S. GDP growth will slow to 2.0% in 2020 from 2.2% in 2019. It will be 1.9% in 2021 and 1.8% in 2022. That's according to the most recent forecast released at the Federal Open Market Committee meeting on December 11, 2019. The projected slowdown in was a side effect of the trade war.


The unemployment rate will average 3.5% in 2020. It will bump up to 3.6% in 2021 and 3.7% in 2022. That's lower than the Fed's 6.7% target. Some people have been out of work for so long that they'll never be able to return to the high-paying jobs they used to have. As a result, structural unemployment has increased. 

The real unemployment rate includes the underemployed, the marginally attached, and discouraged workers. For that reason, it is around double the widely-reported rate. You can put this report into perspective by viewing the unemployment rates since 1929.


Inflation will average 1.9% in 2020. It will rise to 2.0% in 2021 and 2022. The core inflation rate strips out those volatile gas and food prices. The Fed prefers to use that rate when setting monetary policy. The core inflation rate will average 1.9% in 2020, 2.0% in 2021, and 2.0% as well in 2022. The core rate is right at the Fed's 2% target inflation rate. That may give the Fed room to lower interest rates. The U.S. inflation rate history and forecast helps predict the coming years’ inflation levels.

Interest Rates

On March 15, 2010, the Federal Open Market Committee held a special meeting to cushion the economic impact of the COVID-19 coronavirus outbreak. It lowered the current fed funds rate to a range between 0.0% and 0.25%. That's after lowering it to a range of between 1.0% and 1.25% on March 3.

It didn't expect to increase this interest rate until 2021. The Fed is more concerned about promoting growth than about preventing inflation. It didn't see inflation as a threat anytime in the next three years.

The fed funds rate controls short-term interest rates. These include banks' prime rate, the Libor, most adjustable-rate loans, and credit card rates. You can protect yourself from any rate hikes by choosing fixed-rate loans wherever possible.

The Fed started reducing its $4 trillion in Treasurys in October 2017. The Fed acquired these securities during quantitative easing, which ended in 2014. At the July 31, 2019, meeting, it announced it would stop reducing its holdings.

Since the Fed is no longer replacing the securities it owns, it will create more supply in the Treasurys market. That should have raised the yield on the 10-year Treasury note. This should have driven up long-term interest rates, such as those on fixed-rate mortgages and corporate bonds. Instead, investor concern over global economic volatility has kept rates low.

Treasury yields also depend on the demand for the dollar. If demand is high, yields will drop. If the global economy improves, investors will demand less of this ultra-safe investment.

Oil and Gas Prices

The U.S. Energy Information Administration provides an outlook on oil and gas prices from 2019 to 2050. It predicts crude oil prices will average $43 a barrel in 2020 and $55/b in 2021. That's for Brent global. West Texas Crude will average around $5/b less. 

The EIA's energy outlook through 2050 predicts rising oil prices. By 2025, the average Brent oil price will increase to $69/b. This is a quote in 2019 dollars, which removes the effect of inflation. After that, world demand will drive oil prices to the equivalent of $105/b in 2050. By then, the cheap sources of oil will have been exhausted, making crude oil production more expensive.

This forecast does not take into account the effects of climate change. Governments may increase renewable energy production to stop global warming. That would reduce the price of oil significantly.


The Bureau of Labor Statistics publishes an occupational outlook each decade. It goes into great detail about each industry and occupation. Overall, the BLS expects total employment to increase by 8.9 million jobs between 2018 and 2028. 

Health care occupations will account for 18 of the 30 fastest growing occupations. One reason for that is the aging of the population. Computer and math occupations, and those based on alternative energy production, will also grow rapidly.

Three occupational groups will lose jobs. These include production, administrative support, and sales. These jobs are being replaced by computer and technological solutions. Retail sales will also lose jobs, as e-commerce continues to predominate. That shift will also increase jobs in transportation and warehousing.

Climate Change

The Federal Reserve is concerned about how climate change is affecting the economy. Research from the Richmond Fed estimated that it will reduce U.S. economic growth by 30% over the next century.

The Fed is also requiring banks to plan for the economic impact of increased extreme weather. For example, it is asking Florida banks to have risk management plans for hurricanes.

Former Federal Reserve Chairs have urged Congress to enact a carbon tax to lower the dangerous levels of greenhouse gas emissions.

Damage from natural disasters, such as hurricanes, floods, and wildfires, was $150 billion in 2019. That’s lower than the record $350 billion set in 2017, and the $186 billion in 2018. These disasters killed 9,000 people in 2019 and 15,000 people in 2018. Insurance companies paid out $52 billion in 2019 damage claims and $86 billion in 2018. The industry is frustrated by the lack of action on global warming solutions.

These have become worse and more frequent due to global warming. There were 820 natural disasters in 2019, compared to only 520 a year between 1989 and 2018.

How It Affects You

2020 could experience a sharp recession thanks to the COVID pandemic. The best thing to do is to stay focused on your financial well-being. Continue to improve your computer and math skills. Chart a clear course for your career in the fastest-growing industries like health care. If you've lost your job, look at areas that are hiring, such as distribution, or find gig jobs online. If you've invested in the stock market, be calm during any pull-back.

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Article Sources

  1. Board of Governors of The Federal Reserve System. “Table 1. Economic Projections of Federal Reserve Board Members and Federal Reserve Bank Presidents, Under Their Individual Assumptions of Projected Appropriate Monetary Policy, December 2019,” Accessed March 16, 2020.

  2. Board of Governors of the Federal Reserve System. "Federal Reserves Issues FOMC Statement," Accessed March 16, 2020.

  3. Board of Governors of the Federal Reserve System. "Federal Reserve Press Release," Accessed March 16, 2020.

  4. U.S. Energy Information Administration. “Short-Term Energy Outlook,” Accessed March 16, 2020.

  5. U.S. Energy Information Administration. “Table A1. Total Energy Supply, Disposition, And Price Summary,” March 16, 2020.

  6. Bureau of Labor Statistics. “Projections Overview and Highlights, 2018 to 2028,” Accessed March 16, 2020.

  7. Federal Reserve Bank of San Francisco. “Climate Change And The Federal Reserve,” Accessed March 16, 2020.

  8. Insurance Information Institute. “Facts and Statistics: Global Catastrophes,” Accessed March 16, 2020.