MHI Solutions


ECONOMIC MARKET ANALYSIS: What Can We Expect from 2020? One Word: Volatility

* By Jason Schenker *

2018 was a big year and optimism from 2018 carried over into the start of 2019. Then tax cut tailwinds faded against a larger-than-expected trade war between the United States and China. And 2019 weakened. These dynamics of disappointment were most pronounced for the global economy. But weakness in U.S. business investment and U.S. manufacturing played out in 2019 as well. The salience of this weakness casts a long shadow on the year ahead.

U.S. outlook in 2020

Looking ahead at 2020, various financial markets have been vacillating as they are alternatingly influenced by the specter of recession against the backdrop of one of the strongest job markets in U.S. history. But there is more to play out in the year ahead than just the tug of war between U.S. consumption, which is 70% of GDP, and U.S. business investment, which is 15 to 20% of GDP.

The prospects for a tumultuous 2020 political season in the run up to the U.S. presidential election along with potential impeachment could add volatility, uncertainty and adversely impact business investment decisions. Furthermore, the broader global geopolitical landscape has shifted rapidly. And the antagonisms between the U.S. and China are likely to intensify, even if headlines tease prospects of detente. Furthermore, the heretofore fraying edges of diplomacy between the two largest economies on earth is likely to have negative implications for corporate profits and Herculean implications for some supply chains—especially for higher technology industries.

The term “frenemies” is a term that Millennials are typically more likely to invoke than Boomers. But the truth is that a permutation of this phrase was coined in the 1950s about the Cold War between the U.S. and the USSR.

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This issue of MHI Solutions tackles the important topic of digital technologies in the supply chain industry, especially as it relates the transportation and logistics. Transportation plays a central role in supply chains, whether they are local or global enterprises. And just like the overall supply chain, transportation is facing a digital revolution including new solutions for tracking road, rail, sea and air freight and parcel transportation. These digital technologies are disrupting the industry, but they are also providing im-portant new solutions for transportation inefficiencies and urban logistics challenges. They are also creating new digital business models that enhance transparency and sustainability and contribute to end-to-end supply chain visibility. Like the innovations impacting supply chains, these trends are being driven by the growth of e-commerce and the consumers’ never-ending need for better, faster and cheaper. Ignoring them is done at your own peril.

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