Economists see solid growth ahead but risks from trade

A group of business economists foresee the US economic growth remaining solid next year, with unemployment falling further and only a slight chance of a recession. But they express concern about potential risks, notably from trade conflicts.

In its latest forecast being released Monday, the National Association for Business Economics (Nabe) predicts that the economy will grow 2.7 percent next year, only slightly below the 2.9 percent that they expect for all of 2018 as measured by the gross domestic product (GDP).

The 2.9 percent predicted growth for this year would be up

significantly from meager gains of 1.6 percent in 2016 and 2.2 percent in 2017. But it would still fall shy of the pace that President Donald Trump has pledged to achieve with his program of tax cuts and deregulation.

The Nabe forecasting panel of 53 economists foresees only a small risk that the expansion will end next year, putting the risk of a recession in the second half of 2019 at 20 percent. The economists see the risk reaching 30 percent in the second half of 2020, a presidential election year, and 50 percent in 2021 and later.

Among the threats to the economy, 40 percent of the Nabe panel

ranked trade policy as the greatest risk, followed by interest rates (21 percent of the panel) and political or geopolitical events (13 percent).

For 2019, 80 percent of the Nabe economists said they had downgraded their forecasts because of the trade disputes. The Trump administration has imposed punitive tariffs on China and other nations that it accuses of engaging in unfair trade practices.

The increased US import taxes have triggered retaliatory tariffs on a range of US exports. In addition nearly two-thirds of the economists said they had lowered their expectations for business investment because of the trade conflicts.