Today’s news continues the run of positive economic outlooks we’ve seen over the last couple of months (positive state revenue forecast, optimistic blue collar workers, rising consumer confidence, solid wage growth). The National Association of Business Economists (NABE) Outlook Survey anticipates continued economic growth. Here’s the summary statement:
“NABE Outlook panelists continue to view the economy as having solid momentum entering 2019, but they foresee GDP growth cooling from 2.9% this year to 2.7% in 2019,” said NABE President Kevin Swift, CBE, chief economist, American Chemistry Council. “The panel expects the Federal Reserve to continue gradually tightening monetary policy, and anticipates a federal funds rate hike at the upcoming December FOMC meeting, followed by three rate increases in 2019.”
“While panelists remain generally optimistic, three-quarters of respondents see risks being tilted to the downside,” added Survey Chair Gregory Daco, chief U.S. economist, Oxford Economics. “Panelists view increasing trade tensions as the primary downside risk to their outlook, with 80% of respondents reducing their 2019 GDP growth outlook in response to trade policy developments. Even so, recession risks are still perceived to be low in the near term, with the panel expecting a 20% risk of recession by the second half of 2019, and a 30% chance by the end of 2020.”
Those trade tensions have weighted the downside outlook in Washington’s economic forecast. While the weekend brought some optimism regarding trade relations with China, the details of any lasting deal have yet to be determined.
Reporting on the NABE survey, the Associated Press writes,
The NABE forecasting panel of 53 economists foresees only a small risk that the expansion will end next year, putting the risk of a recession in the second half of 2019 at 20%. The economists see the risk reaching 30% in the second half of 2020, a presidential election year, and 50% in 2021 and later.
Among the threats to the economy, 40% of the NABE panel ranked trade policy as the greatest risk, followed by interest rates (21% of the panel) and political or geopolitical events (13.
For 2019, 80% of the NABE economists said they had downgraded their forecasts because of the trade disputes.
A Bank of America survey of small business owners also reports optimism overall.
Small business owners are upbeat, looking to expand and worrying less about financial concerns like health costs.
That’s the finding of a survey of 1,067 owners released last week by Bank of America. The survey shows owners are optimistic about the short and long term. Fifty-seven percent said they expect their revenue to increase in the next 12 months, and 56 percent have plans to increase business over the next five years. Two-thirds said they’re planning to expand in the coming year.
U.S. manufacturers expanded at a faster pace in November as new orders surged, a positive sign for domestic economic growth heading into 2019.
The Institute for Supply Management, an association of purchasing managers, said Monday its manufacturing index rose to 59.3 last month from 57.7 in October. Readings above 50 point to growth and manufacturers have expanded for the past 27 months.
Nothing should ever be taken for granted. But the positive outlooks and economic forecasts bode well for the coming year.