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US economists expect recession in 2020 or 2021: Survey

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But experts are split on whether downturn will hit in 2020 or 2021

WASHINGTON : A majority of economists expect a US recession in the next two years, but have pushed back the onset amid Federal Reserve actions, according to a survey released yesterday.

The National Association for Business Economists (Nabe) found that far fewer experts now think the next recession will start this year, compared with a survey in February.

Nabe conducted its policy poll as US President Donald Trump put the Fed under constant attack, demanding more stimulus, but before the central bank cut the benchmark lending rate on July 31.

However, the Fed was already sending strong signals that it intended to pull back on the rate increases made in 2018 due to concerns starting to dog the economic outlook, including the trade war with China.

"Survey respondents indicate that the expansion will be extended by the shift in monetary policy," said Nabe president Constance Hunter, who is chief economist at KPMG.

Only 2 per cent of the 226 respondents now see a recession this year, compared to 10 per cent in February's survey, Nabe said.

However, the panel is split regarding whether the downturn will hit next year or in 2021, Ms Hunter said in a summary of the survey, which showed 38 per cent expect a contraction of growth next year, while 34 per cent do not see it until the following year.

More economists shifted their recession prediction to 2021, narrowing the gap from the prior report, which had many more expecting the change next year.

But Mr Trump and top White House officials dismissed concerns that economic growth may be faltering, saying on Sunday they saw little risk of recession despite a volatile week on global bond markets, and insisting their trade war with China was doing no damage to the US.

"We're doing tremendously well, our consumers are rich, I gave a tremendous tax cut, and they're loaded up with money," Mr Trump said.


But he was less optimistic than his aides on striking a trade deal with China, saying that while he believed China was ready to come to an agreement, "I'm not ready to make a deal yet".

White House economic adviser Larry Kudlow said trade deputies from the two countries would speak within 10 days and "if those meetings pan out... we are planning to have China come to the US" to advance negotiations over ending a trade battle that has emerged as a potential risk to global economic growth.

Even with the talks stalled for now and the threat of greater tariffs and other trade restrictions hanging over the world economy, Mr Kudlow said on Fox News Sunday the US remained "in pretty good shape".

"There is no recession in sight," he said.

"Consumers are working. Their wages are rising. They are spending and they are saving."

These comments follow a week in which concerns about a possible US recession weighed on financial markets and seemed to put administration officials on edge about whether the economy would hold up through the 2020 presidential election campaign.

US stock markets tanked last week on recession fears, with all three major US indexes closing down about 3 per cent on Wednesday, paring their losses by Friday due to expectations the European Central Bank might cut rates. - AFP, REUTERS