Economists Predict US Recession More Likely Due To Trump’s Trade War
A panel of international economists now estimates the chances of the United States falling into recession in the next two years has increased to 40 percent from 35 percent on account of the destructive effects of Trump's heightened trade war against China.
A poll by Reuters revealed that most of the 120 economists it surveyed held this view. They also said Trump's trade war is already having a negative impact on the U.S. economy, while Wall Street has become more volatile and uncertain.
A minority of the economists polled believe the recession will strike this year, however. On the other hand, more than one-quarter of the economists polled predict a greater than 50 percent probability of recession within two years.
The most pessimistic prediction about the probability of a recession in one year rose from 60 percent to 70 percent.
The economists say the U.S. economy has already lost considerable momentum, slowing to 2.0 percent in the current quarter from 3.2 percent in the first quarter, according to median forecasts from the economists.
The forecast for April to June is a sharp downgrade from 2.5 percent in the April poll. The economists forecast U.S. growth to slow to 1.8 percent (below trend) by the fourth quarter of 2020.
"I have a hard time thinking of a scenario in which a further escalation of the trade tension we currently have would not make recession risk higher," said Michael Hanson, head of global macro strategy at Canadian investment bank TD Securities.
"We are already in a situation where the level of tariffs that are either imposed or threatened to be imposed over the next several weeks is really quite high ... and a move to basically putting tariffs of 25% on everything we import from China is a very real drag in the economy," he pointed out.
China continues to react with defiance and patriotism to the more bitter trade war being waged by Trump. In a front page banner story in the Communist Party's People's Daily, China's leaders said the country is determined to protect its national interests while its dignity is as "firm as a boulder".
"The trade war can't bring China down. It will only harden us to grow stronger," it said.
"What kind of storms have not been seen, what bumps have not experienced for China, with its more than 5,000 years of civilization? In the face of hurricanes, the nearly 1.4 billion Chinese people have confidence and stamina."
The editorial said China's confidence comes from the spirit of its people's perseverance and endless struggle, citing major disasters like floods, SARS and 2008's massive Sichuan earthquake.
"From the Opium War to the Sino-Japanese War to the War of Resistance Against Japanese Aggression and the War to Resist US Aggression and Aid Korea - disaster and misery have come one after the other, tempering the Chinese people, pushing Chinese society to forge ahead in setbacks and move forward in adversity."