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Washington (AFP) – The boost from tax cuts for the US economy is likely to fade next year as risks rise for a recession by 2020, a survey of private economists showed Monday.
The National Association for Business Economics survey of 45 economists found the average forecast for US gross domestic product growth at 2.8 percent in 2018, cooling to 2.6 percent next year.
The panelists “are slightly less optimistic about the US economy in 2018 than they were three months ago,” said NABE vice president Kevin Swift.
More than half of survey respondents (57 percent) said the balance of risks is weighted to the downside, in stark contrast to results in the March 2018 survey, when 75 percent said they saw greater upside potential.
Over the past three months, discussion of economic policy has been dominated by tariffs and potential trade wars.
Steven Cochrane, survey analyst for the association, said the tax cuts signed by President Donald Trump are likely to offer a short-term boost to growth that will ease next year.
Cochrane said economists also are concerned that the administration’s moves to slap tariffs on imports from a number of trading partners will hurt growth.
Half of the panel expects the next recession will occur sometime between the fourth quarter of 2019 and mid-2020.
Three-fourths of the economists in the survey said current trade policies will have a negative effect.
Last week, the United States said it would impose harsh tariffs on steel and aluminum imports from the European Union, Canada and Mexico, and has threatened duties on other imports.
The International Monetary Fund is predicting 2.9 percent growth in the US this year and 2.7 next year, below Trump’s contention that the world’s biggest economy can expand at a pace above three percent.
The US economy has been in expansion since the end of the last recession in June 2009, marking the second longest period without a recession since records were kept, although much of the past nine years has seen sluggish growth.
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