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Economy still has ‘solid momentum,’ but GDP to cool next year: NABE

December 03, 2018

Economists surveyed by the National Association for Business Economics maintained their prior growth projections for the US economy in 2018, the association announced today. The median forecast calls for real GDP growth of 2.9% on an annual basis this year, unchanged from the October 2018 forecast. For 2019, respondents still predict a 2.7% annual growth rate in real GDP.

The panelists’ forecast for nonfarm employment growth was little changed.

“NABE Outlook panelists continue to view the economy as having solid momentum entering 2019, but they foresee GDP growth cooling from 2.9% this year to 2.7% in 2019,” said Kevin Swift, president at NABE and chief economist at American Chemistry Council.

“While panelists remain generally optimistic, three-quarters of respondents see risks being tilted to the downside,” said Survey Chair Gregory Daco, chief US economist, Oxford Economics. “Panelists view increasing trade tensions as the primary downside risk to their outlook, with 80% of respondents reducing their 2019 GDP growth outlook in response to trade policy developments. Even so, recession risks are still perceived to be low in the near term, with the panel expecting a 20% risk of recession by the second half of 2019, and a 30% chance by the end of 2020.”

Panelists now forecast nonfarm payroll growth to average 207,000 jobs per month in 2018, down slightly from 210,000 in the October survey. The panel continues to look for employment growth to moderate in 2019, with the median forecast calling for 166,000 net job gains per month, up from the October forecast of 162,000 jobs per month in 2019.

The average unemployment rate for 2018 as a whole is still expected to be at 3.9% in 2018, unchanged from prior forecasts, and then decline to 3.6% next year. On a quarterly basis, the median forecast is for the unemployment rate to fall to 3.6% in the first quarter of 2019, and remain unchanged until the fourth quarter, when panelists expect the rate to slip to 3.5%.

The median forecast for hourly compensation growth in 2018 was unchanged at 3.0% in the October survey, down from the 3.4% actual increase in 2017. Wage compensation is expected to pick up to a 3.2% annual average growth rate in 2019, also unchanged from the prior survey’s projection.

NABE is a professional association for business economists and others who use economics in the workplace. The survey included 53 professional forecasters and was conducted between Oct. 31 and Nov. 15, 2018.


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