Arthur J. Villasanta – Fourth Estate Contributor
Washington, DC, United States (4E) – The future for U.S. business has turned bleak and the next two years might see another recession triggered by Trump’s unwise and unwanted trade war with the world.
Two-thirds of business economists in the U.S. expect a recession to begin by the end of 2020, according to a new poll by the National Association for Business Economics (NABE). Based in Washington, D.C., NABE is the world’s largest international association of applied economists, strategists, academics, and policy-makers committed to the application of economics.
Some 10 percent of respondents see the next recession starting in 2019. On the other hand, 56 percent said 2020 and 33 percent said 2021 or later. Forty-one percent said the biggest downside risk was Trump’s trade policy. The survey also showed that 18 percent of respondents said it’s higher interest rates while another 18 percent said it would be a substantial stock-market decline or volatility.
“Trade issues are clearly influencing panelists’ views,” said David Altig, NABE’s survey chair and Federal Reserve Bank of Atlanta research director. The survey from Aug. 28 to Sept. 17 interviewed 51 forecasters.
Economists are slightly more optimistic about the economy this year despite Trump’s trade war. The median forecast for inflation-adjusted gross domestic product growth rose to 2.9 percent from a 2.8 percent pace projected in the June survey. The 2019 estimate remained at 2.7 percent.
The poll revealed that 33 percent of respondents said the biggest potential driver of a stronger economic performance is corporate tax reform. Twenty-seven percent cited stronger wage gains and 10 percent said stronger global growth.
Business forecasters were more pessimistic about their assessment of potential risks to expansion. Fifty-one percent said GDP growth threats are weighted to the downside, while 20 percent said they’re tilted to the upside. The rest said they’re balanced.
Respondents in NABE’s survey indicated they expect the Fed to raise interest rates once more this year and three times in 2019. This reckoning is consistent with projections from central bankers. The poll’s median estimate for the target range midpoint at year-end rose to 2.375 percent, equivalent to one more 25-basis-point hike this year, from 2.21 percent seen in the earlier survey.
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