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A day after President Donald Trump pushed back against talk of an imminent recession, a large number of economists expect a U.S. recession in the next two years but have pushed back the oncoming amid Federal Reserve actions, according to a survey released Monday.
As a large amount of U.S. data reports, last week showed a mixed picture on the economy, Trump said: "I'm prepared for everything. I don't think we're having a recession. We're doing tremendously well. Our consumers are rich," Trump told reporters Sunday. "I gave a tremendous tax cut, and they're loaded up with the money. They're buying. I saw the Wal-Mart numbers, they were through the roof," he said.
"And most economists actually say that we're not going to have a recession. But the rest of the world is not doing well like we're doing." His chief economic adviser Larry Kudlow also downplayed talk of a recession. "I sure don't see a recession," he told NBC's Meet the Press.
"Consumers are working at higher wages. They are spending at a rapid pace. They're actually saving also while they're spending... So I think actually the second half, the economy's going to be very good in 2019," he said.
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The National Association for Business Economists (NABE) in its policy poll found that fewer experts now think the next recession will start this year.
"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 two percent of the 226 respondents now see a recession this year, compared to 10 percent in February's survey, NABE said.
However, "the panel is split regarding whether the downturn will hit in 2020 or 2021," Hunter said in a summary of the survey, which showed 38 percent expect a contraction of growth next year, while 34 percent don't see it until the following year.
More economists shifted their recession prediction to 2021. The results show 46 percent expect at least one more rate cut this year from the Fed, while about a third see policy holding where it is now, with 2.25 percent as the top end of the policy range.
Economists are skeptical about a resolution to Trump's trade wars, although 64 percent said a "superficial agreement is possible," NABE said. But that was before Trump announced another round of tariffs of 10 percent on the remaining $300 billion in goods not yet hit by the United States punitive duties. The new measures will take effect in two stages, on September 1 and December 15.
As Trump continues his vocal campaign criticizing the Fed, the NABE survey found economists are concerned about the impact: 55 percent said his remarks do not influence Fed decisions but do "compromise the public's trust in the central bank."
And over a quarter of respondents said the criticism will "cause the Fed to be more dovish than otherwise, thus threatening its independence."
A majority of economy experts, when asked about fiscal policy, said Trump’s tax cuts "had an overall negative impact on housing activity over the past 18 months," due to changes in deductions allowed for mortgage interest.
By Sowmya Sangam
