2020 Economic Outlook March 2020 Ryan Wang US

2020 Economic Outlook March 2020 Ryan Wang US Economist HSBC Securities (USA) Inc. ryan. wang@us. hsbc. com +1 212 525 3181 Issuer of report: HSBC Securities (USA) Inc Disclosures & Disclaimer: This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it

Global slowdown in industrial production in 2019… Source: Netherlands Bureau for Economic Policy Analysis, Federal Reserve 2

…along with a similar slowdown in global trade Source: Netherlands Bureau for Economic Policy Analysis, US Census Bureau 3

US manufacturing sector slowed more than services sector Source: Institute for Supply Management 4

HSBC economic forecasts Source: HSBC (The China impact: Lowering our global growth forecasts, 12 February 2019) 5

COVID-19 cases in China Number of confirmed and suspected cases in China Note: Current cases = confirmed case – recovered cases – death cases Source: CEIC, HSBC 6

China high-frequency indicators Daily coal consumption of six major electricity producers Note: Coal consumption helps to approximate the amount of electricity consumed by the industrial sector. The first day of Chinese New Year in 2020 was 25 January. Source: Wind, HSBC Real estate transactions in 30 large- and medium-size cities Note: The transactions volume of commercial real estate in 30 major cities shows the overall activity of the real estate sector. Source: Wind, HSBC 7

Export linkages for non-Asian economies Source: International Monetary Fund 8

Supply chain linkages Mainland China accounts for a large share of value added in others’ exports… Source: OECD …not only in Asia but also in other regions Source: OECD 9

Tourism impact varies Source: World Bank, CEIC, national sources. Note: data for 2017. 10

US-China trade as a share of US GDP Asset#1 • Asset#2 Source: US Census Bureau, US Bureau of Economic Analysis 11

US: GDP growth may slow further in 2020 Asset#1 • Asset#2 Source: US Bureau of Economic Analysis 12

US: Consumer spending has been supported by a healthy labor market Asset#1 • Asset#2 Source: US Bureau of Economic Analysis 13

US: Possible downside risks for business investment Asset#1 • Asset#2 Source: US Bureau of Economic Analysis 14

US: Residential investment activity has been picking up Asset#1 • Asset#2 Source: US Bureau of Economic Analysis 15

US: Wage growth trending around 3% Asset#1 • Asset#2 Source: US Bureau of Labor Statistics 16

US: Core PCE inflation running a bit below 2% Asset#1 • Asset#2 Source: US Bureau of Economic Analysis 17

US: Falling goods prices, rising services prices Asset#1 • Asset#2 Source: US Bureau of Economic Analysis, HSBC 18

US: Front end of the yield curve is still inverted after 50 bp cut Asset#1 • Asset#2 Source: Federal Reserve, Bloomberg 19

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