US economists expect recession in 2020 or 2021

WASHINGTON, Aug 19 (AFP): A majority of economists expect a US recession in the next two years, but have pushed back the onset amid Federal Reserve actions, according to a survey released Monday.

The National Association for Business Economists found far fewer experts now think the next recession will start this year compared to a survey in February.

NABE conducted its policy poll as President Donald Trump put the Fed under constant attack, demanding more stimulus, but before the central bank cut the benchmark lending rate on July 31.

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 per cent of the 226 respondents now see a recession this year, compared to 10 per cent 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 per cent expect a contraction of growth next year, while 34 per cent 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 per cent 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 per cent as the top end of the policy range.

Economists are skeptical about a resolution to Trump's trade wars, although 64 per cent said a "superficial agreement is possible," NABE said.

But that was before Trump announced another round of tariffs of 10 per cent 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 per cent said his remarks do not influence Fed decisions but do "compromise the public's trust in the central bank."

A Reuters report adds: US President Donald Trump and top White House officials dismissed concerns that economic growth may be faltering, saying on Sunday they saw little risk of recession despite a volatile week on global bond markets, and insisting their trade war with China was doing no damage to the United States.

"We're doing tremendously well, our consumers are rich, I gave a tremendous tax cut, and they're loaded up with money," Trump said on Sunday.

But he was less optimistic than his aides on striking a trade deal with China, saying that while he believed China was ready to come to an agreement, "I'm not ready to make a deal yet."

He hinted that the White House would like to see Beijing resolve ongoing protests in Hong Kong first.

"I would like to see Hong Kong worked out in a very humanitarian fashion," Trump said. "I think it would be very good for the trade deal."

White House economic adviser Larry Kudlow said trade deputies from the two countries would speak within 10 days and "if those deputies' meetings pan out... we are planning to have China come to the USA" to advance negotiations over ending a trade battle that has emerged as a potential risk to global economic growth.

Even with the talks stalled for now and the threat of greater tariffs and other trade restrictions hanging over the world economy, Kudlow said on "Fox News Sunday" the United States remained "in pretty good shape."

"There is no recession in sight," Kudlow said. "Consumers are working. Their wages are rising. They are spending and they are saving."