US economists expect recession in 2020 or 2021, survey shows

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Published 19.08.2019 09:55
Updated 19.08.2019 19:48
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A number of U.S. business economists appear sufficiently concerned about the risks of some of President Donald Trump's economic policies that they expect a recession in the U.S. by the end of 2021.

Thirty-four percent of economists surveyed by the National Association for Business Economics, in a report being released Monday, said they believe a slowing economy will tip into recession in 2021. That's up from 25% in a survey taken in February. Only 2% of those polled expect a recession to begin this year, while 38% predict that it will occur in 2020.

The survey came out after President Donald Trump pushed back against talk of a looming recession as a raft of U.S. data reports last week showed a mixed picture on the economy.

"I'm prepared for everything. I don't think we're having a recession. We're doing tremendously well. Our consumers are rich," Trump told reporters Sunday.

"I gave a tremendous tax cut, and they're loaded up with money. They're buying. I saw the Wal-Mart numbers, they were through the roof," he said.

"And most economists actually say that we're not going to have a recession. But the rest of the world is not doing well like we're doing."

His chief economic advisor Larry Kudlow also downplayed talk of a recession.

"I sure don't see a recession," he told NBC's Meet the Press.

"Consumers are working at higher wages. They are spending at a rapid pace. They're actually saving also while they're spending... So I think actually the second half, the economy's going to be very good in 2019," he said.

"We're doing pretty darn well in my judgment. Let's not be afraid of optimism."

The economists have previously expressed concern that Trump's tariffs and higher budget deficits could eventually dampen the economy.

The Trump administration has imposed tariffs on goods from many key U.S. trading partners — from China and Europe to Mexico and Canada. Officials maintain that the tariffs, which are taxes on imports, will help the administration gain more favorable terms of trade. But U.S. trading partners have simply retaliated with tariffs of their own.

Trade between the U.S. and China, the two biggest global economies, has plunged. Trump decided last Wednesday to postpone until Dec. 15 tariffs on about 60% of an additional $300 billion of Chinese imports — granting a reprieve from a planned move that would have extended duties to nearly everything the U.S. buys from China.

The financial markets signaled the possibility of a U.S. recession last week, adding to concerns over the ongoing trade tensions and word from Britain and Germany that their economies are shrinking

The economists surveyed by the NABE were skeptical about prospects for success of the latest round of U.S.-China trade negotiations. Only 5% predicted that a comprehensive trade deal would result, 64% suggested a superficial agreement was possible, and nearly one quarter expected nothing to be agreed upon by the two countries.

The 226 respondents, who work mainly for corporations and trade associations, were surveyed between July 14 and Aug. 1. That was before the White House announced 10% tariffs on the additional $300 billion of Chinese imports, the Chinese currency dipped below the seven-yuan-to-$1 level for the first time in 11 years, and the Trump administration formally labeled China a currency manipulator.

As a whole, the business economists' recent responses have represented a rebuke of the Trump administration's overall approach to the economy.

Still, for now, most economic signs appear solid. Employers are adding jobs at a steady pace, the unemployment rate remains near a 50-year low, and consumers are optimistic. U.S. retail sales figures out last Thursday showed that they jumped in July by the most in four months.

The survey showed a steep decline in the percentage of economists who found the $1.5 trillion in tax cuts over the next decade "too stimulative" and likely to produce higher budget deficits that should be reduced, to 51% currently from 71% in August 2018.

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