WASHINGTON: A
majority of economists expect a US recession in the next two years, but have
pushed back the onset amid Federal Reserve actions, according to a survey
released yesterday. The survey came out after President Donald Trump pushed
back against talk of a looming recession as a raft of US data reports last week
showed a mixed picture on the economy.

"I'm
prepared for everything. I don't think we're having a recession. We're doing
tremendously well. Our consumers are rich," Trump told reporters Sunday.
"I gave a tremendous tax cut, and they're loaded up with money. They're
buying. I saw the Wal-Mart numbers, they were through the roof," he said.

"And most
economists actually say that we're not going to have a recession. But the rest
of the world is not doing well like we're doing." His chief economic
advisor Larry Kudlow also downplayed talk of a recession. "I sure don't
see a recession," he told NBC's Meet the Press.

"Consumers
are working at higher wages. They are spending at a rapid pace. They're
actually saving also while they're spending... So I think actually the second
half, the economy's going to be very good in 2019," he said.

"We're doing
pretty darn well in my judgment. Let's not be afraid of optimism." The
National Association for Business Economists (NABE) found far fewer experts now
think the next recession will start this year compared to a survey in February.
NABE conducted its policy poll as Trump put the Fed under constant attack,
demanding more stimulus, but before the central bank cut the benchmark lending
rate on July 31.

However, the Fed
was already sending strong signals that it intended to pull back on the rate
increases made in 2018 due to concerns starting to dog the economic outlook,
including the trade war.

Trade war
skepticism

"Survey
respondents indicate that the expansion will be extended by the shift in
monetary policy," said NABE president Constance Hunter, who is chief
economist at KPMG. Only two percent of the 226 respondents now see a recession
this year, compared to 10 percent in February's survey, NABE said. However,
"the panel is split regarding whether the downturn will hit in 2020 or
2021," Hunter said in a summary of the survey, which showed 38 percent
expect a contraction of growth next year, while 34 percent don't see it until
the following year. More economists shifted their recession prediction to 2021,
narrowing the gap from the prior report, which had many more expecting the
change next year.

The results show
46 percent expect at least one more rate cut this year from the Fed, while
about a third see policy holding where it is now, with 2.25 percent as the top
end of the policy range. Economists are skeptical about a resolution to Trump's
trade wars, although 64 percent said a "superficial agreement is
possible," NABE said. But that was before Trump announced another round of
tariffs of 10 percent on the remaining $300 billion in goods not yet hit by US
punitive duties. The new measures will take effect in two stages, on September
1 and December 15.

As Trump
continues his vocal campaign criticizing the Fed, the NABE survey found
economists are concerned about the impact: 55 percent said his remarks do not
influence Fed decisions but do "compromise the public's trust in the
central bank." And over a quarter of respondents said the criticism will
"cause the Fed to be more dovish than otherwise, thus threatening its
independence." The survey also asked about fiscal policy, and a majority
of economists said Trump's tax cuts "had an overall negative impact on
housing activity over the past 18 months," due to changes in deductions
allowed for mortgage interest. - AFP