Business economists have turned decidedly more bearish on the U.S. economy. According to the latest outlook survey from the National Association of Business Economists, U.S. GDP growth, adjusted for inflation, will slow to 2.3% this year and 1.8% in 2020, both down from 2.9% in 2018.
An earlier survey released in March had growth slowing to 2.6% this year and 2.1% next year.
“The panel turned decidedly more pessimistic about the outlook over the summer with 80% of participants viewing risks to the outlook as tilted to the downside, said Gregory Daco, chief U.S. economist at Oxford Economics and chair of the NABE survey, in a statement. In the June survey 60% of the roughly 50-odd economists saw the risks tilted to the downside.
U.S. trade policy remains the dominant downside risk for the U.S. economy, cited by 53% of the 54 economists surveyed. As a result, NABE outlook has the U.S. trade deficit topping $1 trillion in 2020 — the forecast is $1.022 trillion, up from an expected $981 billion this year — due to a significant slowdown in export growth.
The U.S. has imposed tariffs on $360 billion of Chinese goods, plans to tax nearly all imports from China by the end of the year and has imposed tariffs on some European imports as well. China has retaliated with its own tariffs on U.S. imports and threats of additional tariffs, but even if it carries out those threats, only about 70% of U.S. imports will be affected, according to the Peterson Institute for International Economics.
The median forecast among the economists surveyed by the NABE calls for export growth, adjusted for inflation, to slow from 3% in 2018 to 0.1% in 2019 while import growth slows to 1.8% from 4.4% in 2018. Real growth in exports and imports are forecast to rebound slightly in 2020, up 2.1% and 2.8%, respectively.
U.S. and Chinese trade negotiators are set to resume negotiations this Thursday, and the outlook is not optimistic. According to Bloomberg News, China’s lead negotiator, Vice Premier Liu He, told dignitaries his offer will not include a commitment to reform China’s industrial policy or government subsidies, which are among the key demands from the White House.