The U.S. economy is on the longest economic expansion in history, but growth is slowing. Global GDP grew just 2.9% in 2019, marking the first time that global growth slowed to less than 3% since the worldwide recession in 2009.
“The U.S. is still the cleanest shirt in the dirty laundry basket, but it will continue to slow this year, as will everyone else,” says Christian Lawrence, senior market strategist with Rabobank.
Lawrence expects to see a mild economic recession in the U.S. in the second half of the year.
“That’s primarily driven by the fact the manufacturing sector is already in a recession,” he says. “Services have been trending lower. As long as services follow manufacturing lower, growth will turn significantly weaker.”
With the U.S. facing threats of a recession, how is the rest of the world coping?
“While income has been growing and spreading, the world economy has demonstrated increasing resilience and remarkable momentum,” says John Phipps, a farmer from Chrisman, Ill., and columnist for Farm Journal and Top Producer. “To be sure there haven’t been any flashy growth rates, but like the U.S., most of economies are sort of plugging along.”
The global economy is not dominated by the U.S. economy to the degree it used to be just a few years ago, Phipps points out.
“Global growth is being driven by those new consumers in new countries, along with the developed world,” he says. “This could be a stabilizing influence for all of us. It takes a lot more individual decisions to shift the economic trajectory of the global economy, instead of just consumers in the West alone.”
In fact, Phipps says, it’s possible the U.S. or European Union could go into recession without pulling the world down to a halt.
“Losing overwhelming global economic dominance may be a blow to American pride, but it is not without a considerable benefit: more economic stability,” he says. “The more logs you tie together, the steadier the raft, so to speak. Before we cut more ties to the rest of the global economy, we need to look back and recall how little we enjoyed more frequent recessions and a more volatile business cycle.”