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US economy weaker than it looks, recession concerns in 2020: UCLA business school

June 07, 2019

The US economy may be weaker than it looks, according to the UCLA Anderson Forecast released Wednesday by the University of California Los Angeles Anderson School of Management.

Recent 3.1% growth in US real GDP may actually be a forebear of a recession, according to Professor Emeritus Edward Leamer at UCLA Anderson. Concerns in the data behind the growth number include weak residential investment and intellectual property as well as weak residential construction and consumer durables.

“Don’t celebrate the 3.1% GDP growth estimate for the first quarter of 2019,” Leamer said in a statement. While the next year does not appear to be a problem, the year after does in terms of a recession.

UCLA Anderson senior economist David Shulman wrote the risk of recession becomes most problematic in the latter half of 2020.

“With job growth slowing to a crawl of about 40,000 a month in 2020, the risk of a recession in the latter part of that year is nontrivial,” Shulman wrote. “Inflation is forecast to run somewhat above 2% and the Fed will maintain stable interest rates until the second half of 2020, when we forecast two rate cuts. The downside risk to the economy comes from increased trade tensions and the upside risk would come from housing activity rising out of its stupor.”


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