Some U.S. business economists appear sufficiently concerned about the risks of some of President Donald Trump’s economic policies. They are looking at the possibility of a recession in the U.S. by the end of 2021.
Thirty-four percent of economists surveyed by the National Association for Business Economics said they believe a slowing economy will tip into recession in 2021. That’s up from 25% in a survey taken in February. Only 2% of those polled expect a recession to begin this year, while 38% predict that it will occur in 2020.
The president has dismissed concerns about a recession, instead offering an optimistic outlook for the economy after last week’s steep drop in the financial markets. Trump said on Sunday, “I don’t think we’re having a recession.” A strong economy is key to the Republican president’s 2020 reelection prospects.
The economists have previously expressed concern that Trump’s tariffs and higher budget deficits could eventually dampen the economy.
The Trump administration has imposed tariffs on goods from many key U.S. trading partners, from China and Europe to Mexico and Canada. Some officials believe that the tariffs, which are taxes on imports, will help the administration gain more favorable terms of trade. But U.S. trading partners have simply retaliated with tariffs of their own.
Trade between the U.S. and China, the two biggest global economies, has plunged. Trump decided last Wednesday to postpone until Dec. 15 tariffs on about 60% of an additional $300 billion of Chinese imports, granting a reprieve from a planned move that would have extended duties to nearly everything the U.S. buys from China.
The financial markets last week signaled the possibility of a U.S. recession, adding to concerns over the ongoing trade tensions and word from Britain and Germany that their economies are shrinking.
As a whole, the business economists’ recent responses have represented a rebuke of the Trump administration’s overall approach to the economy.
But for now, most economic signs appear solid. Employers are adding jobs at a steady pace, the unemployment rate remains near a 50-year low and consumers are optimistic. U.S. retail sales figures out last Thursday showed that they jumped in July by the most in four months.
The survey showed a steep decline in the percentage of economists who found the $1.5 trillion in tax cuts over the next decade “too stimulative” and likely to produce higher budget deficits that should be reduced, to 51% currently from 71% in August 2018.