Economists hint at next US recession in 2020

washington — A group of top business economists believes the major tax cuts US President Donald Trump pushed through Congress will give a significant boost to economic growth this year and next year. But they worry that by 2020, the country could be entering a new recession.

The National Association for Business Economics says in its latest quarterly outlook that its panel of 45 economists expects the economy to expand 2.8 per cent this year. That is down slightly from the panel’s March forecast, which put GDP growth this year at 2.9 per cent.

The NABE economists are “slightly less optimistic about the US economy in 2018 than they were three months ago,” says NABE vice-president Kevin Swift.

Part of the drop-off in optimism reflects growing worries about what Trump’s get-tough approach on trade might do to US growth prospects. Three-fourths of the NABE panel believes that current trade policies will have a negative impact on the economy.

The NABE forecasting panel was upbeat on the near-term impacts of the $1.5 trillion tax cut that Congress passed in December. The median expectation is that the cuts in individual and corporate taxes will boost growth by 0.4 percentage points this year and 0.3 percentage points next year.

The forecasters said the economy should grow 2.7 per cent in 2019 after their projected 2.8 per cent GDP growth this year. Both projections would be up from 2.3 per cent growth in 2017 and the 2.1 per cent average annual gains the country has seen since the Great Recession ended in 2009.

But many private analysts are more pessimistic, noting that underlying factors such as the retirement of the baby boomers and weak productivity gains will continue to depress long-term growth prospects.

Asked when the next recession might begin, two-thirds of the NABE economists saw one starting by the end of 2020, with 18 per cent even more pessimistic, expecting the next downturn to begin by the end of 2019.