Most business economists predict the United States will fall into a recession within the next two years, a new survey finds.
About half of the 280 business economists polled said they expect a downturn by the end of next year, according to a February survey from the National Association for Business Economics released Monday. Roughly 75 percent say it will happen by 2021. Only 11 percent anticipate the United States avoiding a recession during that two-year window.
The United States is deep into an economic expansion, which began in summer 2009, after the financial crisis. If the expansion lasts until June, it would be the nation’s longest. Though the economy has been robust lately — marked by strong consumer spending, climbing markets and the lowest unemployment rates in decades — signs of a slowdown have surfaced. Recent months have seen dizzying volatility in the securities markets and a sudden drop-off in consumer confidence. Trade tensions with China have taken a toll on economic growth in the United States and abroad.
Shadows of a slowdown have put pressure on the Federal Reserve as it tries to price out interest rate increases. In January, Federal Reserve Chairman Jerome H. Powell said that the economy has “good momentum” and that he didn’t foresee a recession in 2019. But he signaled the Fed would be “patient” about raising rates, as economic growth is expected to fall from the roughly 3 percent of last year to 2.3 percent this year. The Fed raised rates four times in 2018.
Although the Federal Reserve’s rate hikes have been a source of ire for President Trump, who has blamed the central bank and Powell for raising rates too quickly and disrupting the stock market, most economists in the NABE endorse the Fed’s actions.
“Business economists continue to approve of current monetary policy,” NABE President Kevin Swift said in a summary. “Nearly three-quarters of panelists believe that the Federal Reserve’s policy is ‘about right.' "
Though the survey showed most economists anticipate some rise in interest rates this year, the markets are not bracing for impact.
“There is a schism between what the NABE panel and the markets think about the Fed’s rate path and the shrinking of its balance sheet,” said Megan Greene, global chief economist at Manulife Asset Management and chair of the NABE survey. “The markets are pricing in no more interest-rate hikes in 2019, whereas a majority of the NABE panel expects one or two rate hikes this year.”
A lack of resolution between the United States and China on trade is a major source of concern, the survey found. More than 90 percent of economists surveyed said they anticipate existing tariffs to drag the country’s GDP down by 25 basis points or more. Almost all said they expect the tariffs to increase inflation.
On Sunday, Trump said he would delay a scheduled increase in tariffs on $200 billion in Chinese imports as negotiators seek a trade deal with Beijing. If an agreement is reached, Trump is expected to host Chinese President Xi Jinping at his Florida estate late next month to finalize terms.
Fears of a greater global slowdown are growing outside the United States. A survey of nearly 800 top business leaders around the world listed global recession as their biggest concern for 2019. Last month, the International Monetary Fund scaled back its global growth predictions through 2020, saying "the balance of risks remains skewed to the downside” and momentum is “past its peak.”