In 2020, the U.S. economy will enter its 11th year of expansion, the longest expansion since 1854. The U.S. economy grew at an average annualized rate of 2.4 percent during three quarters of 2019, according to the U.S. Bureau of Economic Analysis. We expect U.S. economic growth to slow to around 2.0 percent to 2.3 percent in 2019 as the fiscal stimulus effect fades and as trade weighs on growth. While we are not expecting a recession in 2020, the New York Federal Reserve predicts a 34.8 percent chance of a recession within the next 12 months.

Due to slowing economic growth, the Federal Reserve Open Market (FOMC) cut the federal funds rates for the third consecutive time during the October 2019 meeting. The federal funds rate currently stands at 1.5 percent to 1.75 percent. It is likely the FOMC will hold rates steady for the remainder of 2019 and into 2020, supporting economic growth.

In our view, the key risks to U.S. economic growth and, by extension, the U.S. real e