Trade War Causes a Rise in Risk of Recession

October 08, 2019 | Tuesday



Trump administration's trade war is being the main threat in the risk of recession to mount. And this was according to a survey disclosed on Monday by the National Association for Business Economics. NABE survey chairman Gregory Daco stated, "The rise in protectionism, pervasive trade policy uncertainty and slower global growth are considered key downside risks to U.S. economic activity." Aside from that, a small majority of the Washington-based Association of business economists expects that the Federal Reserve will still hold through 2019. Then, 40% of the group are hoping at least one more rate cut for this year.

In addition to that, the survey's result came as many analysts foresee warning signs in the latest U.S. economic indicators. And this includes the plunge in manufacturing activity to over 10-year low in September. Also, the sudden slowdowns in service-industry growth to levels last seen in 2016. As a result of those reports, it intensified fears economy might be flirting with a recession. Out of the 54 NABE economists surveyed, four in five stated that the firm is at risk of slowing further. In the recent survey, NABE panelists expect to see the real gross domestic product to continue growing at an average rate of 2.3% this year. However, it might slow to 1.8% by 2020.

Ongoing Trade War

Meanwhile, Blackstone Group's chairman and CEO Steve Schwarzman stated that the U.S. economy is, in fact, looking robust due to a healthy labor market and higher consumer spending. Last week's slew of disappointing economic data indicated that the ongoing U.S.-China trade war began to take its toll. And it fuels concerns of a recession. Then, on Tuesday, a gauge of U.S. manufacturing displayed the lowest reading in over ten years for September. However, Schwarzman indicated that manufacturing accounts for around 11% of the U.S. economy.


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