The latest survey by 53 forecasters with the National Association for Business Economics shows that they expect economic growth to slow from 2.9% last year to 2.3% in 2019 and 1.8% in 2020. The forecasts are unchanged from the association’s previous survey in October.
The economists put the odds of a recession starting at 5% this year, 21% in the first half of 2020 and 43% by the end of next year. However, they peg the odds of a recession by mid-2021 at 66%. The American economy is likely to remain resilient this year and next, they say, despite risks arising from President Donald Trump’s trade war with China and skirmishes with other U.S. 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 $360 billion in Chinese imports and is scheduled to hit another $160 billion Dec. 15. China has retaliated by targeting $120 billion worth of American products.
The world’s two biggest economies are locked in a dispute over U.S. allegations that China deploys predatory tactics, including the outright theft of trade secrets, in an aggressive push to challenge U.S. technological dominance.
The 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 wars, which have raised uncertainty for businesses and contributed to a drop in business investment in the April-June and July-September quarters.
The vast majority of business economists — 94% — 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 American consumers to continue driving the economy. Consumer spending, which accounted for almost all U.S. economic growth from July through September, is expected to grow a healthy 2.6% this year and 2.4% in 2020.