2020 Investment Outlook

By Mitchell J. Smilowitz, CPA

Now in its 11th year, the longest economic expansion in U.S. history continues. Inflation is low. Interest rates are low. GDP growth is slow, but ongoing. While the fears of a trade war with China have been receding, global political tensions remain high.

What can we expect in 2020? The JRB’s annual Investment Outlook summarizes the research and insights from investment managers at Fidelity, Goldman Sachs, T. Rowe Price and Vanguard. These excerpts reflect the opinions of these investment managers, not the JRB.


In its 2020 Outlook: Upside May Be Harder to Come By Amid a Slow-Moving, Aging Cycle, Fidelity argues that the global business cycle remains in a mature expansion, with signs of improvement in some areas and a generally modest pace of growth.

Globally, China’s policymakers are emphasizing just enough fiscal and monetary support to maintain stability but not to reaccelerate growth. Measures of business confidence and manufacturing in major European economies such as Germany and Italy are no longer declining, indicating that their economies may be poised for growth.

Despite low interest rates and a solid consumer sector in the U.S., business conditions are mixed and earnings growth is under pressure. Fidelity does not expect a material upswing in the pace of U.S. economic growth this year. U.S. elections in 2020 provide an additional layer of uncertainty. With corporations facing extremely tight labor markets, Fidelity believes that it will be difficult for earnings growth to accelerate without a material improvement in the global economy.

In conclusion, Fidelity believes the aging business cycle may make it difficult for businesses to increase profits and for stock prices to increase. Because global monetary policy continues to promote liquidity, asset prices could continue to increase despite lukewarm fundamentals. However, it’s equally possible that easy-money policies may be nearing the limit of their effectiveness.

Goldman Sachs

In its 2020 investment outlook, A Break in the Clouds, Goldman Sachs expects economic growth will be highest in the U.S. (from 1.75% in 2019 to 2.25% - 2.5% in 2020), where demand is most responsive to financial conditions, and the U.K. (from a decline in GDP in 2019 to 2.4% growth in 2020), where the drag from Brexit is expected to reverse and fiscal policy is expected to ease. Goldman Sachs anticipates a more gradual pickup in Europe (from 0.2% in 2019 to about 1% in 2020), where the fiscal boost is likely to remain limited, and Japan, where they are watching carefully for a negative impact from the October consumption tax hike. The Chinese economy is expected to slow modestly from just above 6% to just below 6%.

From a stock market perspective, Goldman Sachs’ 2020 outlook is more mixed than their relatively positive view on economic growth. After a long period in which profits and financial assets outperformed wages and the real economy, the next several years will likely see the reverse. But in 2020, they still expect the swing in the pendulum to remain quite gradual and the global economy to clock yet another year of progress.

T. Rowe Price

T. Rowe Price’s 2020 Global Market Outlook, Comfortable with the Uncomfortable, predicts that global stock markets will be supported by continued economic growth and low but stable inflation rates. However, they identify a number of risks that could trigger market volatility. These include political uncertainties, slow earnings growth and potential excessive stock values. Much will depend on whether the economic growth that equity markets appear to expect in 2020 actually happens.

Although European economies started to see the beginnings of recovery late in the year, longer‐term factors, such as declining populations and weak productivity, could limit growth to 1% in 2020.

China’s growth slowed sharply in 2019, and is likely to continue decelerating in 2020. This slowdown, T. Rowe Price analysts believe, is only partially due to the trade war. They report that Chinese policymakers appear less inclined than in past slowdowns to stimulate credit and spending, as curbing debt growth among highly leveraged financial institutions appears to be a higher priority. On the positive side, China’s consumer market continues to expand, driven by gains in wages and household disposable income.

With monetary policy worldwide largely committed to ensuring market liquidity and supporting economic growth, the report concludes that the market outlook for 2020 appears considerably brighter than it did at the midpoint of 2019.


An increasingly unpredictable policy environment is undermining economic activity globally through postponed investments and declines in production according to Vanguard’s Economic and Market Outlook for 2020: The New Age of Uncertainty. In the year ahead, Vanguard does not foresee a significant reversal of trade tensions or expect that policymaking will become more predictable. They believe this uncertainty will act as a drag on demand, and if it persists, long run potential growth will be lower.

Inflation is likely to remain soft in 2020. While labor markets are expected to remain tight, the increasing use of technology to eliminate jobs and increase productivity, the development of new sources of energy and the efforts of central banks worldwide to keep interest rates low continue to put downward pressure on prices. As a result, Vanguard anticipates subdued inflation across major economies.

Despite increased doubts about the effectiveness of monetary policy, Vanguard analysts believe that significant fiscal stimulus remains unlikely unless there is a more severe downturn. They conclude that slowing global growth and elevated uncertainty will create a fragile backdrop for markets in 2020.


Economic and market analysts at Fidelity, Goldman Sachs, T. Rowe Price and Vanguard generally agree: the long, slow-moving business cycle will probably continue in 2020, though returns are unlikely to match those of 2019. At the same time, there are many cautionary signals. Will low unemployment kick off inflation? Will central banks continue to promote easy-money policies? Will growth slow in China and increase in Europe? How will international tensions affect global trade?

While it’s interesting to think about where the global economy may go in 2020, it’s critical for those saving for retirement or living on income from their investments to think long-term. This is a good time to review your investment goals and to determine whether you are on-track to meet them. Is your portfolio appropriately structured to achieve your goals?

If you want some assistance to answer these questions, please contact the JRB or call us at 888-JRB FREE (572-3733). We will work with you to define your goals, assess your progress and establish an appropriate asset allocation.