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Odds of recession go up in 2020 with trade policy a concern

June 03, 2019

The US economy will keep on expanding for now, but growth will decelerate next year, according to the National Association for Business Economics’ Outlook report. However, odds of a recession go up at the end of next year with protectionism a top concern. The report is based on a survey of 53 professional forecasters.

“Increased trade protectionism is considered the primary downside risk to growth by a majority of respondents, followed by financial market strains and a global growth slowdown,” said Survey Chair Gregory Daco, chief US economist, Oxford Economics. “Recession risks are perceived to be low in the near term, but to rise rapidly in 2020. Panelists put the odds of a recession starting in 2019 at 15%, climbing to 60% by the end of 2020.”

Of those surveyed, 56% cite “trade policy (increased protectionism)” as the greatest downside risk to the US economy through 2019.

Looking at real GDP, the median forecast among panelists is that growth will slow to 2.1% in the fourth quarter of this year and then slow to 1.9% by the fourth quarter of next year.

The median projection for monthly job increases this year is 184,000, but panelists expect it to moderate to 139,000 per month next year. The median forecast calls for the US unemployment rate to average 3.7% this year, unchanged from the forecast in a previous survey but to decline to 3.6% next year.

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