The forecasts of the National Association of Business Economists (NABE) are among the most closely followed among businesses and the press. The organization’s new forecast puts gross domestic product (GDP) expansion at 1.8% next year. Although at that level there is a buffer against recession, the figure is smaller than in recent years.

NABE President Constance Hunter, CBE, chief economist, KPMG, said that survey respondents believe the U.S. economy will continue to expand into 2020, but “The consensus forecast calls for real GDP growth to slow from 2.9% in 2018 to 2.3% in 2019, and then to 1.8% in 2020.” The positive prediction that came out of the forecast is that many NABE members expect another Federal Reserve rate cut this year and at least one more in 2020. The question is whether this will matter. The economy may be in enough trouble that rate cuts cannot pull it out of a tailspin. As rates approach zero, the Fed may be nearly out of dry powder if the U.S. slips into a recession.

One major worry of the NABE is that trade wars, particularly between the United States and China, will begin to affect the American economy. Much of the agricultural sector already has brutalized. Other U.S. businesses that export to China have started to see a slowdown in sales. Also affected are businesses that import large numbers of goods from China and now have much higher costs to acquire them. The new report said, “The vast majority of respondents—roughly 85%—has lowered their baseline outlook for growth in light of trade policy developments.”

The NABE has expressed anxiety that the U.S. economy does not operate in isolation. Much of Europe has growth near recession levels. Germany already may be in a recession.

The NABE forecast is similar to others from the International Monetary Fund and Organisation for Economic Co-operation and Development (OECD). In each case, the latest economic outlooks have been revised downward and global trade wars are the top concerns.

The trade war is only a few months old and still “limited” to goods that are unlikely to drive the United States further toward recession. Also, the economies of individual states will be affected unevenly. These are the states with the fastest and slowest growing economies.

The NABE survey of 54 professionals was taken from September 9 to September 16.

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