The tortoise and its famous steadiness defined the United States’ economic discussion Monday at Heavy Duty Aftermarket Dialogue (HDAD) in Las Vegas.
During a comprehensive economic presentation, Bill Strauss of the Chicago Federal Reserve told a record-setting HDAD audience that the U.S. economy slightly exceeded expectations with 3 percent GDP growth last year and is trending toward more of the same with greater than 2 percent growth anticipated through 2021. Strauss acknowledged that while some specific economic indicators did shift downward slightly in the fourth quarter, the overwhelming majority of the economy, and the global factors that impact it, remain steady and consistent as the United States continues to enjoy its greatest uninterrupted period of economic growth in decades.
Strauss said one good sign for 2019 is the stock market. Despite some second-half stumbles, Strauss stated the market has rebounded this month and remains incredibly high compared to recent years. Strauss also noted data indicates the current recovery is restrained compared to past deep recession recovery cycles and that the Fed’s recession probably index has eased.
And third-party data is equally stable, Strauss showed, as both Blue Chip and the Federal Open Market Committee (FOMC) have the economy growing at or above trend through 2021.
“We are looking at another very decent year [in 2019],” he said.
If there’s one aspect of the U.S. economy that does create uncertainty, it’s worker productivity and how that impacts wages. Strauss said U.S. worker productivity rose by just 1 percent last year and has held true at that rate for nearly a decade. As such, worker compensation has slowed — pay was up 3 percent in 2018 but only 1 percent over inflation (which approached 2 percent). And that’s even with national employment rate at its lowest level in nearly 50 years.
Fortunately, Strauss added there’s good news on that front as well. He said the Federal Reserve believes slow productivity growth this decade can be tied to a lack of capital investment in business but that the pace of investment has been growing since 2017.
Said Strauss: “This may help explain the productivity growth improvement over the past year.”
As for the global economy, Strauss said the U.S. economy’s stability compares favorably to the rest of the world as no country “is setting the world on fire.”
