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August 20, 2019

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US recession ‘likely by end-2021’

A NUMBER of US business economists appear so concerned about the risks of some of US President Donald Trump’s economic policies that they expect a recession in the US by the end of 2021.

Thirty-four percent of economists surveyed by the National Association for Business Economics, in a report released yesterday, said they believe a slowing economy will tip into recession in 2021. That’s up from 25 percent in a survey in February. Only 2 percent of those polled expect a recession to begin this year, while 38 percet predict that it will occur in 2020. Trump, however, has dismissed concerns about a recession, offering an optimistic outlook for the economy after last week’s steep drop in the financial markets and saying on Sunday: “I don’t think we’re having a recession.” A strong economy is key to the Republican president’s 2020 reelection prospects.

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 US trading partners, from China and Europe to Mexico and Canada. Officials maintain that the tariffs will help the administration gain more favorable terms of trade. But US trading partners have simply retaliated with tariffs of their own.

The financial markets last week signaled the possibility of a US 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.

Still, most economic signs appear solid. Employers are adding jobs at a steady pace, unemployment remains near a 50-year low and consumers are optimistic. Retail sales figures last Thursday showed they jumped in July by the most in four months.

The survey showed a steep decline in the percentage of economists who found the US$1.5 trillion in tax cuts over the next decade “too stimulative” and likely to produce higher deficits.




 

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