The Kiplinger Letter's Must-Read Political and Economic Forecasts for 2020
The annual outlook reveals what to expect from the U.S. economy, trade tensions, the future of coal, weed, GOP election victories and more.
Forecasting the future is no easy task. Kiplinger reporters and editors dig deep, leaning on experts in academia and the private sector. We tap our sources in government to understand how regulations will affect emerging technology. Moreover, we look at past and present trends and apply careful, considered judgment to forecast and analyze coming developments.
To help with your decision-making in 2020, here are 5 major developments to look for in the new year. Want to see all 10? You can download them for free here.
1. No Recession
There will be no recession in 2020. But the pace of economic growth will ease. Expect GDP growth of 1.9%, after 2.3% growth in 2019. 2020’s second half is likely to be stronger than the first half, which will be fodder for both political parties as the presidential race draws closer. Democrats will point to a slowing economy when compared with 2018 and 2019. Meanwhile, Republicans will note the improvement in the second half of the year.
2. Trade Tensions
Trade tensions figure to ease next year after a yearlong trade war that set businesses on edge. But they won’t disappear completely, despite the Trump administration’s two trade wins in recent days (China, plus Canada and Mexico). There’s still risk that China won’t keep its promisesand that disagreement over technology issues will heat up. Plus, ongoing disputes with the European Union. The World Trade Organization is sidelined from making rulings, since President Trump refuses to approve the appointment or reappointment of judges to the WTO’s top court
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3. Coal Use Will Continue to Fall
Look for another milestone in the steep decline of the U.S. coal industry. The U.S. will likely see coal use fall to a 45-year low. With more plants slated to shut down in 2020, expect coal consumption to drop to between 550 million and 570 million tons. The last time the country burned so little coal was 1975. That’s about half of the peak hit in 2007, when demand was over 1.1 billion tons. Overseas demand probably can’t make up for falling consumption at home. Exports jumped in 2017 but peaked in 2018 and have since started to pull back.
4. Weed Will Roll On
The movement to legalize weed at the state level will nab key victories. New York and New Jersey are among the best bets to legalize pot in 2020. Both states were on the verge of approving recreational use earlier this year, before debates over how pot should be taxed and how the money should be spent sidelined efforts. Several states will have marijuana ballot initiatives next year. Arizona is poised to approve recreational pot. In Florida, the push for a ballot initiative is gaining momentum. And governors in Rhode Island, Connecticut and New Mexico all support legalizing pot for adult use.
5. GOP Victories
Democrats will hold the House of Representatives, but Republicans will win back seats in November, chipping away at the current 36-seat Democratic edge. Odds favor Republicans holding on to the Senate. Democrats have a shot for pickups in Arizona, Colorado and Maine, and to a lesser degree, North Carolina. Republicans will recapture the Alabama seat Democrat Doug Jones won in a special election in 2017. Democrats need to net four seats to win the majority, and that’s unlikely.