NABE Outlook Survey - October 2019


NABE Panel Expects GDP Growth to Dip Below 2% in 2020, With Risks to the Outlook Heavily Skewed to the Downside


The October 2019 NABE Outlook presents the consensus macroeconomic forecast of a panel of 54 professional forecasters (see last page for listing). The survey, covering the outlook for 2019 and 2020, was conducted September 9-16, 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 42 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 will continue to expand into 2020, but they anticipate GDP growth will fall below 2% next year for the first time since 2016,” said NABE President Constance Hunter, CBE, chief economist, KPMG. “The consensus forecast calls for real GDP growth to slow from 2.9% in 2018 to 2.3% in 2019, and then to 1.8% in 2020.” “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,” added Survey Chair Gregory Daco, chief U.S. economist, Oxford Economics. “The rise in protectionism, pervasive trade policy uncertainty, and slower global growth are considered key downside risks to U.S. economic activity. While a small majority of panelists expects that any action by the Federal Reserve on interest rates will be on hold through year-end of 2019, over 40% anticipate at least one more rate cut. Three-quarters of respondents expect at least one rate cut by the end of 2020, and a third expects at least two further rate cuts by the end of next year.”



• Panelists expect economic growth, as measured by inflation-adjusted gross domestic product (real GDP) will continue to expand, but moderate in the second half of 2019 and into 2020. The median forecast calls for real GDP growth to average 2.3% in 2019, weaker than both the 2.9% growth in 2018 and the 2.6% gain expected for 2019 in the June survey. Respondents anticipate that GDP growth will register 1.8% in 2020, down from 2.1% forecasted in the June survey.

• On a year-over-year basis, the median projection is for real GDP to rise 2.2% in the fourth quarter (Q4) of 2019, compared to 2.5% in Q4 2018 and 1.8% in Q4 2020. While no panelists predict a recession in 2020, the median of the five most pessimistic forecasts suggests real GDP will be flat in Q2 2020, and decline 0.3% in Q3 before increasing 0.4% in Q4 of next year.

• Four out of five panelists (81%) believe that risks to the economic outlook are weighted to the downside, an increase from the 60% who held this view in June. Only 8% believe risks are weighted to the upside—down from 10% in the June survey—while 10% of respondents report that risks are balanced.

• Trade policy is perceived as the dominant risk, with 53% of panelists citing it as the key downside risk to the economy through 2020. Roughly 12% of respondents consider slower global growth to be the main downside risk. Even smaller shares of respondents view the greatest risk to be financial market volatility (10%) or the risk of a geopolitical event (6%).

• Just over a third of respondents (35%) indicate reduced trade protectionism is the greatest upside risk to the economy, while a quarter of respondents (27%) views stronger wage growth as the main upside risk to the outlook. The other most commonly cited upside risks are infrastructure spending (10% of respondents), easier Fed policy (8%), and stronger global growth (6%).

• The vast majority of respondents—roughly 85%—has lowered their baseline outlook for growth in light of trade policy developments. Panelists expect the impacts to be greater in 2020, with 34% lowering their growth forecasts by more than 0.25 percentage points in 2019, and 61% lowering their forecasts by that much for 2020.