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Recognized Supplier Guide '19

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168 • RV PRO • January 2019 rv-pro.com B U S I N E S S H ow will 2019 turn out for businesses? Will commercial activity begin to slow in the months ahead? When will the next recession begin? To help answer these questions, economists suggest watching a number of important indicators in the early months of 2019. "I would keep a close eye on the political environment," says Scott Hoyt, senior director of consumer economics for Moody's Analytics, a research firm based in West Chester, Pa. "What is going on with tariffs, and is there a risk of a trade war? Beyond that, I would watch for indications about the anticipated pace of interest rate hikes from the Federal Reserve. At some point those will start to bite and put a damper on growth. That will probably be an issue for later in 2019, but the faster rates go up the sooner the economy might be affected." Wage growth also will be an important leading indicator, according to Sophia Koropeckyj, managing director of industry economics at Moody's Analytics, "Despite nearly a decade-long streak of job gains, wage growth has been slower that would be expected given the tightness of the labor market. Over the past few quarters wage growth has finally reached near 3 percent, and with the economy close to or at full employment, wage gains could begin rising faster than expected. This could translate into higher- than-expected inflation if employers pass through higher wages." Similarly, says Koropeckyj, price growth could be faster than expected if trade actions cause companies to pass on their higher costs in the form of higher prices. "Given the tight labor market, employment growth is another important indicator," says Koropeckyj. "The economy has been adding jobs at a remarkably steady pace around 200,000 per month since 2012. The labor market may run out of steam in 2019, especially if the stimulus from higher government spending and tax cuts begins to fade." Finally, keep an eye out for excessive business risk-taking that can backfire on the larger economy. "Businesses eventually make investments that do not pay off, developers overbuild, and creditors extend too much credit," Koropeckyj says. "Most notable today is heightened lending to already-highly indebted nonfinancial businesses. This so-called leveraged lending has taken off recently, creating concern that these companies will have difficulty navigating the next reces- sion and that resulting bankruptcies and losses will stress the economy and financial system. "More broadly, by requiring banks to hold more capital and be more liquid, risk-taking is shifting to the less regulated and more opaque part of the financial system known as the shadow system – an array of nonbank institutions, including asset managers, derivative exchanges, payment processors, insurance companies and pension funds." – Phil Perry Watch These Trends Early in 2019 In 2018, the U.S. economy added an average of about 200,000 jobs a month and workers saw their wages rise.

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