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Global Growth Forecast Slows, But U.S. Outlook Remains Stable

While fears spread of a serious slowdown in the global economy, expectations of U.S. Gross Domestic Product (GDP) growth for 2019 softened versus 2018 but the quarterly U.S. GDP growth rate of 2.0% or more is expected for the months ahead.

Europe is expected to slow because China is slowing largely because of the current trade war with the United States.

The U.S. economy is driven by American consumer spending, which insulates U.S. growth from a slowdown in China, Europe, and other foreign countries.

The Leading Economic Index for the U.S., a forward-looking composite index of 10 benchmarks of U.S. economic activity, declined one-tenth of 1.0%, according to a Conference Board released recently.  The Conference Board forecasts that U.S. GDP growth will likely decelerate to about 2.0% by the end of 2019.

That's lower GDP growth than after the tax bill that kicked in, in January of 2018, but in line with long-term growth expectations.  The Leading Economic Index collapsed before previous Recessions.  This time it is certainly not collapsing now.

Slightly more optimistic is the forecast of 60 leading economists surveyed in early February by The Wall Street Journal, who expected an average 2.2% rate of quarterly GDP growth over the six quarters ahead.  Again, this is certainly not a forecast for a U.S. Recession.

The S&P 500 index, a key growth component in a broadly diversified portfolio, suffered a 19.8% plunge from September 20th's all-time closing high to the Christmas Eve closing low of 2,351.10, and then began its rebound.

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