Zions Bank 2020 Economic Outlook

While analysts are more bullish now than six months ago, economic indicators are sending mixed signals as to whether growth will continue.

Kallee Feuz Jan 14, 2020

After taking bit of a roller coaster ride in 2019, the U.S. economy closed the year on a high note, showing resiliency to downward pressure.

“It’s been a really interesting year in 2019,” said Zions Bank senior economist Robert Spendlove. “Going into 2020, the economy is looking good.”

Presenting the Zions Bank 2020 Economic Outlook to business leaders and bank clients on Friday, Jan. 11, in the Zions Bank Building in downtown Salt Lake City, Spendlove said that despite political uncertainty and signs of weakness in early 2019, the U.S. economy was able to stave off a recession, continuing the longest period of economic expansion in U.S. history.

While analysts are more bullish now than they were six months ago, traditional economic indicators are sending mixed signals as to whether the growth will continue. "There's no doubt we're in the late stages of economic cycle,” Spendlove said.

After 111 consecutive months of economic growth, how long can the U.S. economy keep expanding? Economists are keeping close watch on the following indicators.

International relations

The U.S. trade war with China has directly impacted the manufacturing sector, which only added46,000 jobs in 2019, after adding 246,000 jobs in 2018.International relations issues — especially the trade war, Brexit, and U.S. tensions with Iran — create greater uncertainty and remain a threat to the U.S. economy. If those issues can be resolved, there appears to be more upward momentum in the economy in 2020, Spendlove said.

Slowing job growth

While the U.S. economy hasn’t seen a single month of job loss in a decade, job growth seems to be decelerating. Job growth in 2019 was the third lowest of the decade, and the January jobs report was slightly weaker than expected.


As of December 2019, the U.S. unemployment rate was 3.5% — its lowest level in 50 years. While economists don’t know whether that rate will dip further, a spike in the percentage of jobless Americans could signal a downturn. 

“If we see the unemployment rate going up to 4.5 or 5%, it could be a good indicator that a recession is on the way,” Spendlove said. “The good news is we’re not seeing that right now.”

Tight labor market

The downside of record-low unemployment is the difficulty for businesses to find qualified employees. Nationally, there is less than one available person for every job, compared to six available people for every job during the height of the Great Recession. “The more the labor market tightens, the more difficult it is for overall economy to grow,” Spendlove said. 

Consumer spending

Consumers have been spending well, even as business spending has been contracting for the past couple of months, driven by economic uncertainty. “If consumers still feel good about the health of economy, they’ll continue to spend,” Spendlove said. “And if they continue to spend, the economy will continue to grow.”

Labor force participation

The strong job market continues to bring people off the sidelines and back into the labor market, and for the first time since the great recession, women outnumbered men in the labor force. The infusion of women in the labor force has had a huge positive impact over the past half-century, Spendlove said, however, labor force participation has been declining since 2000 as baby boomers exit the workforce, sometimes referred to as the "silver tsunami."

To increase labor force participation, employers will have to do a better job adjusting to the shifting demographics by rethinking schedules and flexibility for aging baby boomers who want to work on a part-time basis.

Interest rates

After the yield curve inverted in 2019 — typically seen as an early indicator that a recession is on the way — the Fed reacted aggressively, cutting interest rates three times in 2019. Unless there’s a major change, the Fed is in a holding pattern for now, Spendlove said. However, if the economy is improving, it would justify the Fed raising interest rates further in the future.


While mortgage rates dropped below 4% in 2019, housing affordability struggles remain as the U.S. approaches $10 trillion in housing debt. “Taking on too much debt could be one of triggers of next downturn,” Spendlove said. “That’s something I’m very concerned about.”

Read the Economic Snapshot, download Robert Spendlove’s powerpoint presentation or subscribe to future reports in the Economic Insights section of our website.

Kallee Feuz is a Public Relations Officer for Zions Bank.

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