NABE Outlook Survey - March 2019

Economic Momentum Moderates in 2019,
With Trade Policy and Global Slowdown as Greatest Downside Risks

The March 2019 NABE Outlook presents the consensus macroeconomic forecast of a panel of 55 professional forecasters (see last page for listing). The survey, covering the outlook for each quarter of 2019 and 2020, was conducted February 22 – March 7, 2019. The NABE Outlook Survey originated in 1965 and is one of three surveys conducted by the National Association for Business Economics (NABE); the others are the NABE Business Conditions Survey and the NABE Economic Policy Survey. Founded in 1959, the National Association for Business Economics is the professional association for those who use economics in their work. NABE has over 2,800 members and 40 chapters nationwide. Gregory Daco, Oxford Economics, Chair; Julia Coronado, MacroPolicy Perspectives; Robert Fry, CBE, Robert Fry Economics LLC; Jack Kleinhenz, CBE, National Retail Federation; Chad Moutray, CBE, National Association of Manufacturers; Yelena Shulyatyeva, Bloomberg LP; and Ryan Sweet, Moody’s Analytics, conducted the analysis of survey responses for this report. The views expressed in this report are those of the panelists, and do not necessarily represent the views of their affiliated companies or institutions. This report may be reproduced in whole or in part with appropriate citation to NABE.

SUMMARY: “NABE Outlook Survey panelists believe the U.S. economy has reached an inflection point, with the consensus forecasting real GDP growth to slow from 2.9% in 2018 to 2.4% in 2019, and to 2.0% in 2020,” said NABE President Kevin Swift, CBE, chief economist, American Chemistry Council. “The panel has turned less optimistic about the outlook since the previous survey, as three-quarters of respondents see risks tilted to the downside, and only six percent perceive risks to the upside.”

“A majority of panelists sees external headwinds from trade policy and slower global growth as the primary downside risks to growth,” added Survey Chair Gregory Daco, chief U.S. economist, Oxford Economics. “Three-quarters of respondents have reduced their 2019 GDP growth outlook in response to trade policy developments. Nonetheless, recession risks are still perceived to be low in the near term. Panelists put the odds of a recession starting in 2019 at around 20%, and the odds of a recession by the end of 2020 at 35%. In part,” Daco continued, “this reflects the Federal Reserve’s dovish policy U-turn in January. A near-majority of panelists anticipates only one more interest rate hike in this cycle compared to the three hikes forecasted in the December survey.”


• The median forecast for growth in inflation-adjusted gross domestic product (real GDP) reflects slowing growth moving forward. GDP growth is expected to soften from 3.1% in the fourth quarter (Q4) of 2018 to 2.1% in the fourth quarter of 2019, and then to 1.9% in the fourth quarter of 2020. The anticipated growth rate for 2019 is lower than the 2.5% percent forecasted in the December 2018 survey.

• This anticipated trend of slower growth can also be seen in the forecasts for annual growth rate averages. The panel anticipates 2.4% and 2.0% economic growth in 2019 and 2020, respectively, slipping from a 2.9% annual rate of growth in 2018. In the December survey, respondents predicted 2.7% growth for 2019.

• Nearly three-quarters (74%) of panelists believe that risks to the economic outlook are weighted to the downside—virtually unchanged from the share holding that view in December. Only 6% believe risks are weighted to the upside, down from 12% in the December 2018 survey. The remaining 20% of respondents report that risks are balanced.

• In light of recent U.S. trade policy and other nations’ reactions, half (52%) of respondents have reduced their forecasts for 2018 GDP growth by 0.25 percentage points (ppt) or less, while just over a third of respondents (35%) report no change to their forecasts. Close to three-quarters (72%) of panelists have lowered their forecasts for 2019, with 58% of panelists lowering their forecasts by 0.01 to 0.25 ppt, and 13% by 0.25 to 0.50 ppt. About 21% of panelists report no change to their 2019 forecasts, while 8% have boosted their forecasts for GDP growth.

• Sixty percent of panelists indicate they have lowered their forecasts for business investment in 2019 as a result of U.S. trade policy, with half of the panel having raised their inflation outlook. Only 40% of panelists have lowered their forecasts for personal consumption expenditures, and a small majority (58%) reports that trade issues have had no impact on their forecasts for personal consumer expenditures.