THE U.S. ECONOMY is performing well by most key measures. However, consumers, investors, companies, and other market participants have become more wary about the near-term future--with seemingly good reason. Global and U.S. economic prospects are weakening and the agricultural economy shows few signs of an imminent comeback.
"Trade uncertainty, rising debt levels, and market volatility are threatening to derail the global economy and creating difficult operating environments for U.S. agriculture," says Dan Kowalski, vice president of CoBank's Knowledge Exchange Division. "Trade is the outsized risk. Unresolved disputes with Mexico, Canada, Europe, and China are the greatest collective threat to the U.S. economy in 2019."
The global economy is slowing and the effects will spread to U.S. shores. World economic output hit an eight-year high in 2018, powered by advanced economies and emerging markets, but challenges mounted late last year and risks decisively are weighted to the downside for the coming months.
Trade is the biggest risk, as the world's two largest economies--belonging to the U.S and China--test each other's willingness to accept economic pain. The rising of debt levels is another undercurrent that threatens to derail the global economy. Total global debt levels--all public and private debt--now are more than three times greater than in 2001.
The U.S. economic expansion is set to become the lengthiest in history this summer, but clouds forming on the horizon suggest more modest growth in 2019 and greater concerns for 2020. Therefore, we can expect a delicate balance of consumer strength to offset a slowing housing market and weaker business investment to keep the U.S. economy growing between 1.75% and 2.25% in 2019.
The world's largest economies were widely expected to grow in concert in 2018. That growth did not materialize. As a result, the major central banks are attempting to guide their economies through very different stages of the economic recovery. Japan is committed to stimulating its economy for the foreseeable future. The European Central Bank will not raise interest rates until at least the third quarter of 2019. China's economy is slumping and its central bank has indicated that it is ready to loosen monetary conditions as needed.
Gross domestic product forecasts have been cut amidst a darkening outlook for the U.S. and Chinese economies. If this slowing materializes, it will become very difficult for the Federal...