Today’s economic outlook from the National Association of Business Economists continues to reflect the prevailing view: slower growth, heightened downside risk, and a slim likelihood of a recession in the next six months.
From the survey:
• Panelists expect economic growth—as measured by inflation-adjusted gross domestic product (real GDP)—to continue. The median forecast for GDP growth in 2019 is 2.3%, unchanged from the October survey. Respondents anticipate GDP growth will register 1.8% in 2020, also unchanged from the October survey. Real GDP increased 2.9% in 2018.
• On a year-over-year basis, the median projection is for real GDP to rise 2.1% from the fourth quarter (Q4) of 2018 to Q4 2019 and by 1.9% through Q4 2020. In comparison, real GDP increased 2.5% year-overyear in Q4 2018. No panelists forecast a recession in 2020 (two quarters of negative GDP growth), although the median of the five most pessimistic forecasts indicates a decline of a 0.1% annual rate in Q4 2020.
• Overall, the view for the future improved compared to the October survey. In that survey, 81% of panelists indicated the balance of risk was tilted to the downside, compared to 71% in the December survey. Furthermore, 19% of the panelists currently believe the balance of risk is to the upside—an increase from the 8% of respondents who held this view in October. The share of panelists that believes risks are equally balanced remains at 10%.
• The odds of a recession occurring through the first half of 2020 remain generally low. Panelists put the odds of a recession starting in the second half of 2019 at 5%, rising to 21% by the first half of 2020 and 43% by the end of next year. Respondents put the odds of a recession starting by mid-2021 at 66%. The odds of a recession beginning after mid-2021are 34%.
The economists expect American consumers to continue driving the economy. Consumer spending, which accounted for almost all U.S. economic growth from July through September, is expected to grow a healthy 2.6% this year and 2.4% in 2020.
On top of last week’s strong jobs report, this about as good as we can expect this year. Plenty of caution flags still flying.