In 2020 or 2021, #US economists predict a #recession: survey

WASHINGTON: According to a study published on Monday, most economists predict a US recession in the next two years, but have pushed back the start among Federal Reserve actions.

Compared to a study in February, the National Association for Business Economists discovered far fewer specialists now believe the next recession will begin this year.

NABE performed its strategy survey as President Donald Trump constantly attacked the Fed, requesting more stimulus, but on July 31 before the central bank cut the benchmark loan rate

However, the Fed was already sending strong signals that it intended to pull back on the rate increases made in 2018 due to concerns starting to dog the economic outlook, including the trade war with China.

“Survey respondents indicate that the expansion will be extended by the shift in monetary policy,” said NABE President Constance Hunter, who is chief economist at KPMG.

Only two percent of the 226 respondents now see a recession this year, compared to 10 percent in February´s survey, NABE said.

However, “the panel is split regarding whether the downturn will hit in 2020 or 2021, Hunter said in a summary of the survey, which showed 38 percent expect a contraction of growth next year, while 34 percent don´t see it until the following year.

More economists shifted their recession prediction to 2021, narrowing the gap from the prior report, which had many more expecting the change next year.

The results show 46 percent expect at least one more rate cut this year from the Fed, while about a third see policy holding where it is now, with 2.25 percent as the top end of the policy range.

Economists are skeptical about a resolution to Trump´s trade wars, although 64 percent said a “superficial agreement is possible,” NABE said.

But that was before Trump announced another round of tariffs of 10 percent on the remaining $300 billion in goods not yet hit by US punitive duties. The new measures will take effect in two stages, on September 1 and December 15.

As Trump continues his vocal campaign criticizing the Fed, the NABE survey found economists are concerned about the impact: 55 percent said his remarks do not influence Fed decisions but do “compromise the public´s trust in the central bank.”

And over a quarter of respondents said the criticism will “cause the Fed to be more dovish than otherwise, thus threatening its independence.”

The survey also asked about fiscal policy, and a majority of economists said Trump´s tax cuts “had an overall negative impact on housing activity over the past 18 months,” due to changes in deductions allowed for mortgage interest.

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