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US recession odds pick up as economists cut growth estimates
[WASHINGTON] The likelihood of a US recession in the next 12 months rose to 35 per cent in an August survey of economists, from 31 per cent forecast previously, as global trade tensions fuel economic uncertainty.
Growth in the world's biggest economy will average 2.3 per cent this year, down from 2.5 per cent seen in a July survey. Gross domestic product expansion is forecast to slow to a 1.8 per cent annualised pace in the third quarter, from 3.1 per cent in the first three months of the year and 2.1 per cent in the second quarter.
"Trade tensions are needlessly roiling financial markets, which could eventually destabilise a stable economy," Parul Jain, chief investment strategist at Macrofin Analytics LLC in Wayne, New Jersey, said in comments attached to her survey response.
President Donald Trump last week announced new tariffs on imported Chinese goods, to take effect on Sept 1, causing steep declines in global stock markets. The S&P 500 index of US stocks has fallen more than 3 per cent since July 31. That was the day the Federal Reserve cut interest rates for the first time since 2008, to a range of 2 per cent to 2.25 per cent, in a bid to support the economy.
Economists moved up expectations for the next Fed interest-rate cut to September from December and now see a 25-basis-point reduction in the benchmark rate, to a range of 1.75 per cent to 2 per cent, at the next meeting, according to the poll.
Global growth forecasts for 2019 were also cut, to 3.2 per cent from 3.3 per cent. Bloomberg's survey was conducted Aug 2 to Aug 7.