US headed towards another recession this year, say economists

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Published: February 26, 2019 3:00:00 PM

Nearly half of the economists in a recent survey said they expect the US to slip into an economic recession in the next year 2020.

The United States of America may be headed towards another economic recession, as early as the current year 2019 itself, if some economists are to be believed. Nearly half of the economists in a recent survey said they expect the US to slip into an economic recession in the next year 2020.

“While only 10% of panelists expect a recession in 2019, 42% say the recession will happen in 2020, and 25% expect one in 2021,” said a survey conducted by the National Association for Business Economics (NABE). The semi-annual survey was conducted by the NABE among its members in the month of January this year.

A majority of panelists continue to believe that the United States Federal Reserve must maintain its current inflation target of 2 per cent. They expect further rise in interest rate in 2019. “The markets are pricing in no more interest-rate hikes in 2019, whereas a majority of the NABE panel expects one or two rate hikes this year,” said Megan Greene, global chief economist, at Manulife Asset Management, in the survey.

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Over one-third of the economists surveyed showed concerns against the trade policies of President Donald Trump, saying that if the existing tariffs persist, those can reduce the US GDP growth by 25 basis points in 2019. A quarter of the economists expect a reduction of 50 basis points in 2019 GDP growth, while 15 per cent expect a reduction of more than 50 basis points. Economists further pointed out towards the likelihood of increasing inflation in 2019 due to the existing tariffs.

Further, 25 per cent of economists believe the administration’s deregulation efforts will negatively impact the economy in 2019-2020, while 10% expect no impact whatsoever, according to the survey. Moreover, 78 per cent of the panelists do not view illegal immigration at the southern US border as a crisis, added the survey.
The survey comes ahead of the Commerce Department’s advance readings for the fourth quarter of GDP, which got delayed due to the government shutdown.

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