In a mid-year report, the Associated Builders and Contractors warns that developments such as a continuation of current trade wars and high debt levels could lead to a weaker economy in 2020 or later.
A number of vulnerabilities could ultimately hamper what’s now the longest-ever economic expansion in history, said Anirban Basu, chief economist for the ABC, a construction industry trade group.
“Given that every expansion in U.S. history has ended in recession, leaders of construction firms are rightly wondering when the record-setting expansion will end,” said Basu. “Looking at conditions on the ground, it likely won’t be in 2019, but 2020 could be problematic for the broader economy and 2021 for a significant number of contractors.”
Basu said a number of developments could lead to a recession in 2020. They include: trade wars, soft corporate earnings, slow job growth, high levels of household, corporate and government debt and the approaching election in 2020.
But there could be reason for optimism, too. The economy has largely performed better than expected in recent months, Basu said.
“The economy could continue to prove resilient,” Basu said. “To date, the economy has navigated ongoing trade disputes and associated tariffs with aplomb. It has also withstood serial interest rate hikes, the longest federal government shutdown in history, extreme weather, shifting immigration policy, ongoing labor market shortages and a lengthy investigation regarding foreign influence in U.S. elections.”