Is the US about to lose its crown as economic pace-setter?

IMF forecasts will be released Monday but some economists are already calling it

Is the US about to lose its crown as economic pace-setter?
Steve Randall

The United States economy may not be setting the pace for the world’s finances in the year ahead.

A rising number of economists are forecasting that the world’s biggest economy will slow during 2020 and that growth will lag the rest of the world.

Recent years have seen the US economy grow as President Trump’s tax cuts helped spike demand. However, with an election incoming, there are signs that things are about to change.

“We are turning on its head the story we’ve been telling each other for the last two years, namely that Europe was bad and the U.S. was good,” Torsten Slok, chief economist for Deutsche Bank AG told Bloomberg.

Pimco is one of the asset managers feeling downbeat on the US economy. Its forecast is for as little as 1% growth in the first half of 2020, although it expects an uptick in the second half.

JPMorgan Chase global economist Michael Hanson is forecasting full-year growth of 1.7% for the US, down from 2.3% in 2019. This is likely to outpace the growth of most other major industrial nations but fall short of overall global growth of 2.5%.

However, not all economists believe that the US will be weaker than the global economy.

“I don’t agree that the US will under-perform in 2020 and suspect that the market may be a bit too optimistic on the rest of the world,” Stephen Jen, chief executive officer of Eurizon SLJ Capital said in a client note. He believes that the optimism about China and Europe may be overstated.

World leaders will be meeting in Davos, Switzerland next week and there will be a lot of talk of global trade matters and climate change. How to make business more climate-friendly will be a key focus.