NABE Outlook Survey - December 2018

Economic Growth Continuing in 2019, But with Trade Tensions Adding to Downside Risk


The December 2018 NABE Outlook presents the consensus macroeconomic forecast of a panel of 53 professional forecasters (see last page for listing). The survey, covering the outlook for the end of 2018 and each quarter of 2019, was conducted October 31-November 15, 2018. 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; 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 panelists continue to view the economy as having solid momentum entering 2019, but they foresee GDP growth cooling from 2.9% this year to 2.7% in 2019,” said NABE President Kevin Swift, CBE, chief economist, American Chemistry Council. “The panel expects the Federal Reserve to continue gradually tightening monetary policy, and anticipates a federal funds rate hike at the upcoming December FOMC meeting, followed by three rate increases in 2019.” “While panelists remain generally optimistic, three-quarters of respondents see risks being tilted to the downside,” added Survey Chair Gregory Daco, chief U.S. economist, Oxford Economics. “Panelists view increasing trade tensions as the primary downside risk to their outlook, with 80% of respondents reducing their 2019 GDP growth outlook in response to trade policy developments. Even so, recession risks are still perceived to be low in the near term, with the panel expecting a 20% risk of recession by the second half of 2019, and a 30% chance by the end of 2020.” 


  • The median forecast for growth in inflation-adjusted gross domestic product (real GDP) from the fourth quarter (Q4) of 2017 to the fourth quarter of 2018 is 3.1%, unchanged from the growth rate predicted in the October 2018 NABE Outlook survey. Likewise, the median forecast for real GDP growth from Q4 2018 to Q4 2019 did not change, with panelists calling for 2.5% growth over that period. Thus, respondents continue to suggest some moderation in growth moving into next year.
  • Overall, the panel anticipates economic growth in 2018 will be stronger than the actual 2.2% annual real GDP growth rate in 2017. On an annual basis, real GDP growth in 2018 is expected to be 2.9%, unchanged from the October forecast. For 2019, respondents predict a 2.7% annual growth rate in real GDP.
  • Nearly three-quarters of panelists perceive the risks to GDP growth are tilted to the downside, while 12% indicate that upside risks outweigh downside risks. Only 14% of respondents report that risks to GDP growth are balanced.
  • In light of recent U.S. trade policy and other nations’ reactions, half (52%) of respondents reports no change in their 2018 GDP forecasts, while just over a third of respondents (37%) have reduced their forecasts by 0.25 percentage points (ppt) or less. For 2019, however, a large majority (80%) of panelists has lowered their forecasts, with two-thirds (63%) lowering their forecasts by 0.01 to 0.25 ppt. Additionally, 4% of respondents have curbed their 2019 forecasts by 0.26 to 0.5 ppt, with 4% reducing their forecasts by more than 0.5 ppt. Only 11% of panelists report no change to their outlook, while 9% have boosted their GDP growth forecasts by up to 0.25 ppt.
  • Almost two-thirds of panelists indicate they have lowered their forecasts for business investment in 2019 as a result of U.S. trade policy, while two-thirds have raised their inflation forecasts moderately. Forty-one percent of panelists indicate that they have lowered their forecasts for personal consumption expenditures, while a small majority reports that trade issues have had no impact on their forecasts for personal consumer expenditures.