The job market is strong and consumer confidence is high, but there are signs the U.S. economy is decelerating, according to one analyst.
An improving landscape for domestic manufacturers on the heels of new trade agreements could also provide a boost, said Leigh-Ann Wilkins, a researcher and economic outreach associate for the Federal Reserve Bank of Philadelphia.
"The good thing is we're experiencing economic growth with a very, very solid labor market despite some perceived weaknesses," said Wilkins.
"The downsides are a lot of uncertainty over trade policy ... in conjunction with a global economic slowdown that can cause our economy to slow going into 2020 and 2021."
Speaking at the annual meeting of the Northeast Berks Chamber of Commerce and economic forecast on Friday, Wilkins painted a primarily favorable portrait of the overall fiscal health of the U.S.
"The forecast looks good," said Tim Snyder, president and CEO of Fleetwood Bank, which sponsored the event. "Some minor hesitation about a few sectors, but the jobs are good. Overall, a good economy."
The U.S. economy is in its 11th year of expansion, the longest in its history, and Wilkins stressed policy makers "are not in any way predicting a recession based on current economic data."
Growth is down, however. Although the country's gross domestic product rose 2.1% in the third quarter of 2019 — up slightly from 2% in the second quarter and on par with national averages — that marks a year-over-year decrease from 3.4% in 2018.
Economists also predict gains will continue to dip.
"GDP growth over the last century averages about 2% per year," said Wilkins. "So while this seems slower as we exit as the fiscal stimulus that was enacted in 2017, it should be noted this is actually solid and average growth our country has experienced over the long term.
"If you look to see what people think will happen going through 2020, it seems to be pretty solid, running at a little below average at about 1.7 or 1.9%."
Reductions in business investment and government spending were a drag on the economy in the third quarter, as was an uptick in imports.
But toward the end of the quarter, manufacturers were encouraged by an agreement that could end or at least cool the U.S. trade war with China, according to a Federal Reserve Bank of Philadelphia survey.
"They're a lot less optimistic than they were over the last couple years, but they are still positive," said Wilkins. "And we did see a spike up in the most recent report in December."
A revised North American Free Trade Agreement, or NAFTA, currently working its way through Congress could further reduce volatility for manufacturers, said Wilkins.
The economy is driven by consumers though. Spending accounts for 70% of the GDP, and while the figures are still "very high," it's another sector where growth has slowed.
"(Spending) is sort of trending downward and plateauing, so it's something economists are keeping an eye out for."
Unlike policy makers, the market might be indicating a recession is on the horizon. But with unemployment at 3.5%, one of the lowest rates in 50 years, prospects for the economy remain bright.
"Consumers have the ability to have this self-fulfilling prophecy in terms of what happens in the economy," said Wilkins. "If enough people believe that things are gonna go down and they contract spending and investment enough, we can go into a recession.
"So keep spending."