Why NABE Thinks a Recession Is Off the Menu in 2019

The National Association for Business Economics (NABE) released its survey for the month of May, and despite overarching concerns about recession and trade wars, the panel saw a favorable outlook in the short term.

The June 2019 NABE Outlook presents the consensus macroeconomic forecast of a panel of 53 professional forecasters. The survey covers the outlook for each quarter of 2019 and 2020.

Overall, panelists expect economic growth, as measured by inflation-adjusted gross domestic product (real GDP), to remain positive but to decelerate through the end of 2020. Following an increase of 3.2% at a seasonally adjusted annual rate in the fourth quarter of 2018. The median forecast is for real GDP growth to slow to a 2.1% rate by the fourth quarter of 2019 and 1.9% by the fourth quarter of 2020.

Approximately 60% of panelists believe that risks to the economic outlook are weighted to the downside, compared with the 74% who held that view in March. Also, 10% believe risks are weighted to the upside, up from 6% in the March survey. The remaining 28% of respondents report that risks are balanced.

[nativounit]

According to the panel, the odds of a recession remain generally low over the next 12 months, but they rise late in 2020. Panelists put the odds of a recession starting in 2019 at 15%, with a 35% probability of recession starting by the middle of 2020. Overall, panelists put the odds of a recession starting before the end of 2020 at 60%. This compares with odds of 35% in the March survey.

Gregory Daco, survey chair, chief U.S. economist, Oxford Economics, commented:

Increased trade protectionism is considered the primary downside risk to growth by a majority of respondents, followed by financial market strains and a global growth slowdown. Recession risks are perceived to be low in the near term, but to rise rapidly in 2020. Panelists put the odds of a recession starting in 2019 at 15%, climbing to 60% by the end of 2020. While a small majority of panelists anticipates the next Fed move will be a rate hike, the median forecast does not reflect any rate increases until the third quarter of 2020, and a majority of panelists believes weakness in the real economy would be the primary factor driving a rate cut.

[recirclink id=551204]
[wallst_email_signup]