The nation’s business economists foresee a sharp slowdown in US economic growth over the next two years, in sharp contrast to predictions by US President Donald Trump’s administration that growth is to accelerate this year and next.
That finding comes from a survey being released today by the National Association for Business Economics (NABE). Its economists collectively project that growth, as measured by GDP, would reach a modest 2.4 percent this year and just 2 percent next year.
Among the key factors in their dimmer assessment are a global slowdown and the ongoing trade conflicts between the Trump administration and several major trading partners.
Still, the NABE economists say that they think a recession remains unlikely any time soon.
For last year, economic growth amounted to 2.9 percent, the government has estimated. The economy benefited last year from tax cuts and increased government spending, the gains from which are now thought to be fading. It is one reason why most economists foresee a more sluggish pace of growth.
The NABE projections, from a panel of 55 professional forecasters, represent a significant drop from their previous forecast in December last year of 2.7 percent growth this year. Their estimate is much lower than the Trump administration’s new projection that GDP growth would remain at more than 3 percent this year and over the next six years.
However, the administration is already projecting huge deficits of more than US$1 trillion over the next four years. If growth falls short of its optimistic forecasts, those deficit figures could soar even higher and inhibit the economy’s ability to accelerate.
The NABE forecast is in line with the updated outlook that the Federal Reserve released on Wednesday last week. The Fed projected that GDP growth would slow to 2.1 percent this year and 1.9 percent next year, having downgraded its previous estimates to take account of the global slump and other risks.
The NABE economists attributed their weaker outlook in part to a growing economic drag from Trump’s trade policies. The import taxes that Trump has imposed on China and some other nations have prompted retaliatory tariffs on US exports.
“A majority of panelists sees external headwinds from trade policy and slower global growth as the primary downside risks to growth,” Oxford Economics US economy head and NABE survey panel chairman Gregory Daco said.
Three-fourths of the NABE forecasters had reduced their GDP growth estimates for this year because of the likely consequences of the trade conflicts, the association said.
Still, the panel put the likelihood that a recession would begin by the end of this year at about 20 percent and 35 percent by the end of next year.
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