While the stock market continues to skyrocket, many questions about the economic outlook for Iowa remain. How will trade deals affect the state? Will an election year add an element of uncertainty for investors? What about the ongoing challenges for businesses in the region to find workers? We asked the panelists for our Economic Forecast luncheon last month for their thoughts on the trends we need to be watching in 2020, and the threats to keep an eye on as the year unfolds.

Lackluster earnings growth
Darrell L. Cronk, chief investment officer for wealth and investment management, Wells Fargo & Co.
We need to see both economic and earnings growth recover in 2020. U.S. economic growth has downshifted from a run-rate of 3% in 2018 to 2.2% in 2019 and is projected to be 1.8% in 2020. This is approaching stall speed for the U.S. economy. Similarly, S&P 500 earnings growth was roughly flat in 2019 even as markets set all-time highs. In fact over 90% of the S&P 500 return last year came from price/earnings multiple expansion, and a small amount came from earnings growth. This trend will need to change in 2020 for risk markets to advance higher and the current recovery to continue. 

Election uncertainty
Joe Murphy, executive director, Iowa Business Council
Business leaders value certainty in all aspects so they can better invest and maximize opportunities. While elections are certainly not a threat, it is something we track closely. Elections have the potential to impact many policies, including business climate, trade, energy, and health care. That’s why the IBC engages directly with policymakers in a nonpartisan way in effort to share research and economic trends that better inform policy decisions at all levels.

Skilled workers
Kathy Leggett, Future Ready Iowa policy adviser
Iowa Workforce Development sees the negative impact of the lack of a skilled workforce as one of the biggest threats to our economy. This is compounded when you add the impact of the reduction and elimination of low-skill jobs due to advances in technology and automation, creating a larger pool of Iowans that must be upskilled.

International disruptions
Thomas Root, associate professor of finance, Drake University
Outside of the political cycle causing potential slowing of the domestic economy, the largest threat comes from international disruptions. China just experienced one of its slowest quarters of growth in the last 30 years, and Europe is still working through the impact of Brexit. All of these situations need to be monitored closely throughout 2020.  

Talent needs
Jay Byers, CEO, Greater Des Moines Partnership
Talent attraction, retention and development continues to be the top priority we hear about from Greater Des Moines Partnership investors and stakeholders. We continue to work as a community to address this challenge through major quality of life projects, such as the Central Iowa Water Trails project, and talent development efforts, including Future Ready DSM. We are preparing our region for the future world of work and continuing to advance our Global DSM International Talent strategy, among multiple other initiatives.