Yesterday, Ensemble Capital’s CIO Sean Stannard-Stockton appeared on CNBC to discuss our outlook for 2020, the state of the economy and the risks presented by the US-China trade war. The excerpt below is part of the extended interview.

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The clip above starts just after Sean discussed the rate of growth of the US economy. The point he made that we think is underappreciated by investors is just how solidly the economy has actually been growing.

A year ago, the market was deeply worried about the risk of a recession. Yet year over year nominal GDP growth so far in 2019 has been 4.1%, slightly faster than the average economic growth rate over the last decade. Importantly, the first three quarters of this year were lapping average GDP grow last year of 5.6%, the fastest period of growth since 2006. Year over year comparisons will now start getting easier as the economy begins to lap the slowdown in growth that began in the 4th quarter of last year.

One way to think about the economy is looking at the two year growth rate to get a better view of the core rate of growth. On a two year stacked basis, the US economy grew in the first three quarters of 2019 at a rate of 4.8%. Almost right in line with the Old Normal rate of growth that we discussed last year as possible emerging.

The big question now is what lies ahead. If the economic slowdown in the manufacturing sector is indeed bottoming as Sean suggests might be happening in the interview, and if the trade war issues get better or at least stop getting worse, it is possible that the overall US economy might grow at a surprisingly strong rate in 2020, continuing the strong growth of the past two years.

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