The economic narrative remains cloudy. We’ve recently written of a declining consumer sentiment, continued growth in state revenue collections, rising retail sales, consumer confidence and productivity gains, and global uncertainty.
Adding to the fog is this: The National Association of Business Economists reports that 74 percent of NABE members predict a recession by the end of 2021. The NABE graph breaks it down: 2 percent see a recession this year, 38 percent in 2020, and 34 percent in 2021. That looks like an improvement from February, where 10 percent forecast a 2019 recession and 42 percent saw one coming next year.
And that squares with the NABE interpretation:
Compared with results in the February 2019 survey, respondents, on balance, expect the next U.S. recession to occur later. Only 2% of respondents expect a recession to begin in 2019 (compared with 10% in February), and a plurality (38%) still predicts one will begin in 2020 (down slightly from 42% in February). The share of respondents anticipating a recession will begin in 2021 has increased from 25% in February to 34%. In addition, 14% expect a recession will not occur until after 2021 (compared to 11% in February).
In February, 77% of the economists expected a recession either this year, next year or in 2021.
A strong economy is key to the Republican president’s 2020 re-election prospects. Consumer confidence has dropped 6.4% since July.
Americans’ confidence in the U.S. economy improved in July, with Gallup’s Economic Confidence Index rising seven points to +29. The latest index is the highest Gallup has measured since February.
The recent trend has been positive.
As the AP writes, consumer confidence is key to prolonged economic growth.
Low unemployment, rising wages and easy credit have given consumers the confidence and ability to spend in recent months. That has proved crucial as spending by U.S. businesses has declined, U.S. manufacturing has fallen into a funk, and the economies of many other large countries, including Germany, have begun to shrink.
The strength of the consumer has convinced many business leaders that the U.S. economy won’t go into recession anytime soon…
Caution in fiscal policy continues to be a good idea. But there’s also reason to be concerned about overly negative assessments about the national economy.