The odds of a US recession by next year have increased sharply, with mounting protectionism continuing to pose the greatest economic threat, a business economic survey showed yesterday.
Nearly all the respondents to the quarterly survey from the National Association for Business Economics expected that growth would slow this year, 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 last month, 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 5 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 a report.
“Recession risks are perceived to be low in the near term but to rise rapidly in 2020,” he said.
The panelists put the odds at 60 percent for a US recession before the end of next year — 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 the past few 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 said they 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 last year.
Sixty percent said the balance of risks was weighted to the downside, but this was down from 74 percent in the previous survey.
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