Economists are concerned that the Trump administration’s tough approach on trade could push the country into a 2008-like recession starting in 2020. The concerns come amid widespread optimism about the new tax cuts that should lead to an economic boost in 2018 and 2019.
The National Association for Business Economics (NABE) estimates that the economy will grow 2.8% by the end of the year based on its GDP. The forecast shows a slight decrease from the group’s prediction in March, which saw the GDP grow 2.9% by the end of the year.
NABE analysts are less optimistic about the U.S. economy this month than they were in March because economists are very concerned about President Trump’s ongoing trade war with some of the nation’s largest trade partners.
Around 75% of NABE economists believe that the current trade tensions would negatively impact the economic growth. Last week, the White House hiked the tariffs on aluminum and steel imports from Canada, Mexico, and the E.U.
Next Recession Is Looming
The Trump administration also threatened to hit Chinese imports with higher tariffs. The decision could spur a global trade war as China and other affected nations will surely retaliate.
NABE experts believe that the $1.5 trillion corporate and individual tax cut could boost the economy 0.4 percentage points through December and 0.3 percentage points through 2019.
Next year, economists expect an economic growth of 2.7%, which is an increase from 2017’s 2.3% gains. The Trump administration is more optimistic, though, with a forecast of 3% or more over the next decade.
On the other hand, analysts remain pessimistic as weak productivity and an aging population that needs to retire will deflate growth prospects. NABE economists predict that the benefits of Trump’s tax cuts will wear off by 2020.
By the end of 2020, a new recession could emerge, according to two-thirds of the panel’s economists. What’s more, 18% of NABE economists expect the next recession to start by the end of next year.
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