Reuters
- The US economy appears poised to enter a recession within the next two years, according to a new survey.
- More than 70% of economists surveyed by the National Association for Business Economists think a recession will occur before the end of 2021, according to results out Monday.
- Stocks dropped sharply last week after a key recession signal flashed for the first time since before the global financial crisis in 2007.
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The US economy appears poised to enter a recession in two years, according to a new survey of business economists.
72% of economists surveyed by the National Association for Business Economists predicted that a recession would occur by the end of 2021, according to results out Monday. That’s up from 67% in February, according to data gleaned from more than 200 respondents.
The new figure combines the 38% of economists that expect a recession to strike in 2020 with the 34% that see one befalling the US economy in 2021. When a previous survey was conducted in February, 42% saw a 2020 meltdown, while just 25% forecasted one in 2021.
The survey was taken both before the Federal Reserve lowered interest rates July 31 and data pointed to heightened recession concerns in financial markets.
National Association for Business Economics
Stocks dropped sharply last week after a key recession signal flashed for the first time since before the global financial crisis in 2007. Economists and investors have also become increasingly jittery about escalating trade tensions between the US and China, which the business economists recently cited as a risk.
"After more than a year since the US first imposed new tariffs on its trading partners in 2018, higher tariffs are disrupting business conditions, especially in the goods-producing sector," NABE President Constance Hunter said in a separate survey of the economy last month.
"The majority of respondents from that sector, 76%, indicates that tariffs have had negative impacts on business conditions at their firms."
That contrasts recent comments from the White House, which has maintained a far rosier view of the economy than both private and government experts. The Trump administration has repeatedly promised the economy would grow at or above 3% throughout its term.
"I’m prepared for everything," Trump told reporters Sunday when asked in an airport tarmac gaggle whether the administration was ready for a potential downturn. "I don’t think we’re having a recession. We’re doing tremendously well."
He said the rest of the world economy "was not doing well like we’re doing," a strain economists have widely warned could drag down US growth. But the president downplayed that risk, pointing to corporate tax cuts that took effect last year and second-quarter earnings results.
"Our consumers are rich," Trump said. "I gave a tremendous tax cut, and they’re loaded up with money. They’re buying. I saw the Walmart numbers; they were through the roof, just two days ago. That’s better than any poll. That’s better than any economist."
Trump privately sought guidance from Wall Street executives on the economy last week as the recession signal sent stocks lower. During a conference call with Bank of America’s Brian Moynihan, Citigroup’s Michael Corbat, and JPMorgan’s Jamie Dimon, the president was briefed on the economic landscape and markets.
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See Also:
- ‘Something does not compute’: A prominent chief economist explains why conflicting signals in the stock and bond markets are ‘very dangerous’
- An investment chief overseeing $160 billion explains why traders shouldn’t worry about a recession right now
- ‘We’re going back to QE, and we’re going into recession’: Peter Schiff thinks the air is already coming out of the bubble — and has a stark warning for investors
SEE ALSO: Trump held a call with top Wall Street execs as markets tumbled Wednesday
Source: Business Insider – gheeb@businessinsider.com (Gina Heeb)