WASHINGTON - Economists have become more concerned about US growth prospects, citing trade friction as the major worry, but recession risks have receded slightly, according to a survey released Monday.
Nearly half of the panel surveyed by the National Association for Business Economics expect a recession before the end of next year, down from 60 percent in the prior survey.
The panel expects the world's largest economy to slow, with growth falling below 2 percent for the first time since 2016, the survey showed.
Recent data have shown the US labor market remains strong, but manufacturing is in recession while the larger services sector is slowing, giving rise to fears about the health of the US economy, especially amid President Donald Trump's grinding trade war with China and increasing tensions with Europe.
The NABE panel "turned decidedly more pessimistic about the outlook over the summer, with 80 percent of participants viewing risks to the outlook as tilted to the downside," said Gregory Daco, the group's survey chair and chief US economist at Oxford Economics.
"The rise in protectionism, pervasive trade policy uncertainty, and slower global growth are considered key downside risks to US economic activity," he said in a statement on the findings in the quarterly survey.
Looking further out, 69 percent of the panel expects a recession by mid-2021.
The Federal Reserve has cut interest rates twice this year and many market analysts expect more stimulus to be announced later this month, but the NABE panel was less convinced.
Daco said over 40 percent anticipate at least one more rate cut this year, while three-quarters of respondents expect at least one rate cut by the end of 2020.
The median forecast by the panel is for growth of 2.3 percent this year, slowing to 1.8 percent next year after 85 percent of the panel cut their real GDP projections.
source: news.abs-cbn.com
WASHINGTON - A majority of economists expect a US recession in the next two years, but have pushed back the onset amid Federal Reserve actions, according to a survey released Monday.
The survey came out after President Donald Trump pushed back against talk of a looming recession as a raft of US data reports last week showed a mixed picture on the economy.
"I'm prepared for everything. I don't think we're having a recession. We're doing tremendously well. Our consumers are rich," Trump told reporters Sunday.
"I gave a tremendous tax cut, and they're loaded up with money. They're buying. I saw the Wal-Mart numbers, they were through the roof," he said.
"And most economists actually say that we're not going to have a recession. But the rest of the world is not doing well like we're doing."
His chief economic advisor Larry Kudlow also downplayed talk of a recession.
"I sure don't see a recession," he told NBC's Meet the Press.
"Consumers are working at higher wages. They are spending at a rapid pace. They're actually saving also while they're spending... So I think actually the second half, the economy's going to be very good in 2019," he said.
"We're doing pretty darn well in my judgment. Let's not be afraid of optimism."
The National Association for Business Economists (NABE) found far fewer experts now think the next recession will start this year compared to a survey in February.
NABE conducted its policy poll as Trump put the Fed under constant attack, demanding more stimulus, but before the central bank cut the benchmark lending rate on July 31.
However, the Fed was already sending strong signals that it intended to pull back on the rate increases made in 2018 due to concerns starting to dog the economic outlook, including the trade war with China.
TRADE WAR SKEPTICISM
"Survey respondents indicate that the expansion will be extended by the shift in monetary policy," said NABE president Constance Hunter, who is chief economist at KPMG.
Only two percent of the 226 respondents now see a recession this year, compared to 10 percent in February's survey, NABE said.
However, "the panel is split regarding whether the downturn will hit in 2020 or 2021," Hunter said in a summary of the survey, which showed 38 percent expect a contraction of growth next year, while 34 percent don't see it until the following year.
More economists shifted their recession prediction to 2021, narrowing the gap from the prior report, which had many more expecting the change next year.
The results show 46 percent expect at least one more rate cut this year from the Fed, while about a third see policy holding where it is now, with 2.25 percent as the top end of the policy range.
Economists are skeptical about a resolution to Trump's trade wars, although 64 percent said a "superficial agreement is possible," NABE said.
But that was before Trump announced another round of tariffs of 10 percent on the remaining $300 billion in goods not yet hit by US punitive duties. The new measures will take effect in two stages, on September 1 and December 15.
As Trump continues his vocal campaign criticizing the Fed, the NABE survey found economists are concerned about the impact: 55 percent said his remarks do not influence Fed decisions but do "compromise the public's trust in the central bank."
And over a quarter of respondents said the criticism will "cause the Fed to be more dovish than otherwise, thus threatening its independence."
The survey also asked about fiscal policy, and a majority of economists said Trump's tax cuts "had an overall negative impact on housing activity over the past 18 months," due to changes in deductions allowed for mortgage interest.
source: news.abs-cbn.com
