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The U.S. economy is heading into 2020 on a positive note. The stock market is near a record high. Unemployment is near a record low. And while trade tensions haven't been resolved completely, they have settled down for the moment. NPR's Scott Horsley recaps some of the ups and downs of the economy in 2019 and takes a look at what lies ahead next year.
SCOTT HORSLEY, BYLINE: When CNN asked Americans this month how they're feeling about the economy, 3 out of 4 describe conditions as good or very good. That's the most positive rating pollsters have found since 2001. And no wonder - lots of people are working. Paychecks are growing faster than inflation. And while there were some storm clouds on the economic horizon this year, most of us didn't get soaked. I spoke to economist Sarah House at the busy office of Wells Fargo Securities.
SARAH HOUSE: Confidence remains pretty darn high. So consumers still feel very good about the overall position of the economy, especially the jobs market. And that does suggest that consumer spending should remain pretty strong as we head into 2020.
HORSLEY: U.S. employers added nearly 2 million jobs in the first 11 months of this year. And while that's down from the 2.4 million in the same period last year, it's still pretty strong for the 11th year of an economic expansion. Average wages rose a little over 3% in the last year, slightly more for those at the bottom of the income ladder. And the stock market spent much of December setting new records.
HOUSE: Even if a lot of consumers these days aren't directly invested in the stock market, you know, they see the headlines and see it as a good sign.
HORSLEY: The market's performance looks even better because last December was so lousy. The Dow Jones Industrial Average is up 22% for this year, but the gain would be only half that large if you count from the end of November 2018, before government shutdown and the threat of an all-out trade war triggered a stock market swoon last Christmas. This year, the government managed to keep the lights on. And economist Nariman Behravesh of IHS Markit says trade tensions with China and other countries have been turned down to a slow boil.
NARIMAN BEHRAVESH: We're not out of the woods yet. And there's still a fair amount of uncertainty. Although the good news is it looks like we've sort of steped back from the precipice on a lot of these issues.
HORSLEY: Still, some of the damage from the trade war has already been done. Manufacturing's been in a slump for the last four months. Factories are especially sensitive to global forces. And nervous business owners have been reluctant to invest. A year ago at this time, Federal Reserve officials thought they would be raising interest rates to prevent the economy from overheating. Instead, in an abrupt about-face, Fed Chairman Jerome Powell and his colleagues cut interest rates three times between July and October.
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JEROME POWELL: I don't think anybody saw coming the challenges that we face this year. They were a surprise.
HORSLEY: Powell says he and his colleagues were forced to change course when confronted with the president's trade war and a slowdown in global growth.
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POWELL: I'm pleased that we moved to support the economy in the way that we did. I think our moves will prove appropriate. And again, I think both the economy and monetary policy right now I think are in a good place.
HORSLEY: Lower interest rates have given a boost to the housing market, but there are still challenges out there. President Trump says a mini-deal with China will be signed in a couple of weeks, but most of the tariffs are still in place. And Boeing's announcement that it's temporarily halting production of the troubled 737 Max jet will put a noticeable dent in first quarter growth. Economic growth was already slowing to about 2.3% this year and somewhat less than that next year. Still, Behravesh says the economy is not likely to grind to a halt.
BEHRAVESH: It looks like we've dodged the recession. It looks like manufacturing activity may have hit a trough. We have lowered now the probability of a recession, both in the U.S. and the world, to about 20%.
HORSLEY: That should give consumers the confidence they need to keep spending in the new year. Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.