Bill Adams

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Nala Johnson, a student at Garden Homes Lutheran School in Milwaukee, helped decorate a tree with her classmates and teachers.

At a recent client lunch in Milwaukee, PNC Financial Services senior economist Bill Adams laid out his view of the economy going into 2019 and beyond. There are a lot of positive signs, but a tight labor market and escalating trade tensions make for a complicated picture.

“We’re expecting that real GDP growth slows in the second half of 2019 and probably in 2020 we’ll have a below trend year of economic growth. … When people ask us … our response is that there’s around a 35 percent chance, a little bit more than one in three, of a recession in 2020.”

“Why has the (labor force) participation rate fallen over time? Some of it is because of reduced demand for workers without higher education because of automation, globalization. Some of it is because employers have drug tests and background checks and they were unwilling to hire people who didn’t pass those two up until this point in the expansion. My hunch is that a lot of those hiring practices, at least at the margin, are starting to change.”

“I think the effect (of tariffs) on prices in the United States is not going to be huge.”

“If you want to manufacture a piece of heavy equipment and stamp the side of it so it looks like it came off a factory production line in Wisconsin and try to sell it in Brazil and the Chinese government is not going to stop you, it’s the sort of thing you could do if you really wanted to hit the U.S. hard.”

“As a millennial, I don’t feel like we’re really that much smarter about levering up than generations that came before us. You do see different consumption patterns in millennials. I think the bigger factor probably is a lot of millennials have student loan balances and because they’re already carrying a lot of debt from student loans, they don’t have a lot of borrowing capacity… to become homeowners.”

“I think the Chinese economy is having a bit of a tough year and I think actually not that much of it is due to trade with the U.S.”

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