WASHINGTON, June 3, 2019 (BSS/AFP) – The odds of a US recession by next
year have increased sharply, with mounting protectionism continuing to pose
the greatest economic threat, according to a business economic survey Monday.
Nearly all the respondents to the quarterly survey from the National
Association for Business Economics predicted growth would slow in 2019 but
were moderately less gloomy about the risks to their outlook.
However, the poll of 53 economic forecasters from major US corporations
and universities was conducted in the first half of May, just as US trade
relations with China took a sudden turn for the worse but before US President
Donald Trump’s latest threat to impose new tariffs on Mexico in a dispute
over migration starting at five percent and quickly increasing to 25 percent.
“Increased trade protectionism is considered the primary downside risk to
growth by a majority of respondents, followed by financial market strains and
a global growth slowdown,” Gregory Daco of Oxford Economics, who chaired the
survey, said in the report.
“Recession risks are perceived to be low in the near term but to rise
rapidly in 2020.”
The panelists put the odds at 60 percent for a US recession before the end
of 2020 — nearly double the 35 percent forecast in the survey three months
ago.
Nearly 90 percent of respondents said they had cut their growth forecasts
in recent months due to US trade policy, which has involved battles with all
major US trading partners, but even so the overall consensus for this year
and next are a bit higher than the last survey.
Panelists now expect GDP growth to fall to 2.6 percent this year and 2.1
percent by next year, from 2.9 percent at the end of 2018.
Most, or 60 percent, said the balance of risks was weighted to the
downside but this was down from 74 percent in the previous survey.