Weaker US growth ahead, say business economists in survey

WASHINGTON • Forecasters are less optimistic about the US expansion this year, though they are nearly unanimous in their expectations that a recession can be kept at bay until at least 2020, a National Association for Business Economics (NABE) survey showed yesterday.

Two-thirds of respondents expect growth to exceed 2 per cent this year, down from the 90 per cent in the prior survey for the 12 months to the third quarter of 2019, according to the Dec 17-Jan 9 survey of 106 NABE members.

"After a year of robust capital spending, business investment has cooled a bit, and expectations for the next three months slackened similarly," NABE president Kevin Swift, chief economist at the American Chemistry Council, said in a statement released with the survey.

"Fewer firms increased capital spending compared with the October survey responses, but the cutback appeared to be concentrated more in structures than in information and communication technology investments," Mr Swift said.

The results follow reports showing that US manufacturing slumped last month, while consumer sentiment has weakened as the US-China trade war and record government shutdown fuel uncertainty. JPMorgan Chase & Co and Barclays both cut their first-quarter growth projections last week, citing the effects of the partial closure.

Other takeaways from the survey showed:

  • 84 per cent of respondents said that the 2017 Tax Cuts and Jobs Act has not spurred plans to change hiring or investment.
  • 77 per cent said trade concerns have not caused their companies to change investment, hiring, or pricing, similar to the prior survey.
  • 53 per cent report skilled labour shortages at their firms, the most since October 2000 and up from 47 per cent in October.
  • 47 per cent said sales at their firms rose in the final quarter of last year, down from 61 per cent in the October survey.

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A version of this article appeared in the print edition of The Straits Times on January 29, 2019, with the headline 'Weaker US growth ahead, say business economists in survey'. Print Edition | Subscribe