The US’ business economists expect the nation’s economic growth to decelerate this year and next, but for the economy to avoid stumbling into recession, extending a record-breaking expansion already in its 11th year.
A survey by 53 forecasters with the National Association for Business Economics showed that they expect economic growth to slow from 2.9 percent last year to 2.3 percent this year and 1.8 percent next year.
The forecasts are unchanged from the association’s previous survey in October.
The economists put the odds of a recession starting at 5 percent this year, 21 percent in the first half of next year and 43 percent by the end of next year. However, they peg the odds of a recession by the middle of 2021 at 66 percent.
The US economy is likely to remain resilient this year and next, they say, despite risks arising from US President Donald Trump’s trade dispute with China and skirmishes with other US trading partners: Half the respondents call trade tensions the No. 1 downside economic risk through the end of next year.
The Trump administration has slapped tariffs on US$360 billion in Chinese imports and is scheduled to hit another US$160 billion on Dec. 15. China has retaliated by targeting US$120 billion worth of US products.
The world’s two biggest economies are locked in a dispute over US allegations that China deploys predatory tactics, including the outright theft of trade secrets, in an aggressive push to challenge US technological dominance.
The US Federal Reserve has lowered the short-term interest rate it controls three times this year. The cuts are meant in part to offset economic damage from Trump’s trade disputes, which have raised uncertainty for businesses and contributed to a drop in business investment in the April-to-June and July-to-September quarters.
The vast majority of business economists — 94 percent — do not expect the Fed to cut interest rates again this year, but they are divided over what the central bank will do next year.
The economists expect US consumers to continue driving the economy.
Consumer spending, which accounted for almost all US economic growth from July through September, is expected to grow a healthy 2.6 percent this year and 2.4 percent next year.
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