United States: Amid uncertainty over President Donald Trump's growth agenda, US economists increasingly are worried about risks to the economy, though they see little chance of a recession near term, according to a survey released Monday.
The National Association for Business
Economists quarterly survey showed little change in the forecasts compared with
June in key areas such as economic growth, which was projected at 2.2 per cent
in 2017 and 2.4 per cent in 2018.
But the September survey of about 50
economists showed 48 per cent believe the risks to the economy are weighted to
the downside, indicating chances for an economic slowdown, while 43 per cent
see the risks tilted to the upside, meaning growth could outpace forecasts.
That is a shift from June, when
upside risks outweighed downside risks by 60 to 36 per cent.
Ken Simonson, a survey analyst for
NABE and the chief economist of the Associated General Contractors of America,
cited a number of factors behind the somewhat more pessimistic outlook.
"There probably is more concern about
North Korea and perhaps the Federal Reserve seems closer to making a move
towards tightening," he told AFP.
However, "Downside doesn't translate
into expectation of recession, but slower growth.”
Simonson also said decreased optimism
about the success of Trump's agenda in Washington likely contributed to the
shift.
The survey showed 73 per cent of
respondents believe individual tax cuts will be enacted by the end of 2018,
down from 83 per cent in the June survey. And 61 per cent now see an
infrastructure plan enacted, down from 83 per cent previously.
And those figures are much higher
than those in NABE's semi-annual survey of a larger group of economists
released last month, which also showed rising concerns.
Simonson said he was highly skeptical
Washington will produce a major tax overhaul by the end of 2018 given the
complexity of the issue and the sharp political polarization in Congress.
Still, nearly three-quarters of
panelists viewed the odds of a 2018 recession as 25 per cent or lower, with the
remaining group seeing the chance as 26 to 50 per cent probability.
The survey was conducted while
Hurricane Harvey pummeled Houston, but before Hurricane Irma hit Florida. The
report made no attempt to assess the storms.
Analysts say hurricanes typically
depress short-term growth, but the hit is made up for later as rebuilding fuels
economic activity.
The forecast for monthly nonfarm
payroll growth for 2017 was unchanged at 178,000, but unemployment is now seen
as averaging 4.4 per cent, down from the 4.5 per cent in June.
Economists expect the Federal Reserve
to continue with a strategy of gradual interest rate increases, with the center
of the federal funds target range seen at 1.375 percent at year end, and 2.125
percent by the end of 2018, from 1.00-1.25 percent currently.
After the Fed's two-day policy
meeting Wednesday, analysts see a good chance of a rate increase in December.
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