NABE Outlook Survey - June 2019

NABE Outlook Panel Foresees Favorable Short-Term Outlook
But Recession Fears Surge amid Rising Trade Protectionism

The June 2019 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 each quarter of 2019 and 2020, was conducted May 6-May 14, 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 2,900 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: “Despite a number of mixed economic reports, NABE Outlook Survey panelists believe the U.S. economy will continue to expand,” said NABE President Kevin Swift, CBE, chief economist, American Chemistry Council. “The consensus forecast calls for real GDP growth to slow from 2.9% in 2018 to 2.6% in 2019, and then to 2.1% in 2020. While the panel has turned slightly more optimistic about the outlook since the previous survey, 60% of panelists still view risks to the outlook as tilted to the downside.” “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,” added Survey Chair Gregory Daco, chief U.S. economist, Oxford Economics. “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.”  


-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 (Q4) of 2018, the median forecast is for real GDP growth to slow to a 2.1% rate by Q4 2019 and 1.9% by Q4 2020. 

-This anticipated trend of slower growth is also seen in the forecasts for year-over-year changes. The panel anticipates real GDP growth to slow from 3.0% between Q4 2017 and Q4 2018, to 2.4% in the year ending in Q4 2019, and 2.0% in the following four quarters. The median forecast for 2020 would put real GDP growth at its weakest annual level since 2016. There is a sizable degree of dispersion in the forecasts, ranging from a median of 1.7% growth among the lowest five forecasts for Q4 2019/Q4 2018 to 3.0% among the highest five forecasts. For the Q4 2020/Q4 2019 forecasts, the dispersion widens to 0.0% for the lowest five up to 2.8% for the highest five. 

-Sixty percent of panelists believe that risks to the economic outlook are weighted to the downside— compared with the 74% who held that view in March. Ten percent believe risks are weighted to the upside—up from 6% in the March survey. The remaining 28% of respondents report that risks are balanced. 

-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.