Economists are waiting for the imminent recession in the US
Bloomberg conducted a survey among American economists. Journalists set a goal to find out what are the prospects for the economy of the United States in the near future. The results were disappointing. Most experts predict the imminent onset of a recession in the United States. Analysts argue that there are a number of signs that indicate a worsening economic situation in the next 2 years. However, experts are confident that by that time, the States will beat the record for the duration of GDP growth.
Signs of a quick recession in the US
Wall Street is waiting for a report on the growth of the economy of the United States for the IV quarter of 2018. The report should have been submitted much earlier, but because of the shutdown, the publication of data had to be postponed. Analysts are confident that the figures will be disappointing. In comparison with the third quarter, where growth was shown by 3.4%, in the fourth quarter, the dynamics are expected to worsen by 0.9%.
An important factor in the imminent recession, experts believe the ratio of government bond yields, lasting 10 years and 2 years. If this difference is negative, then the probability of an imminent recession is quite large. At the moment, the difference remains at a positive level but gradually decreases. This is direct evidence of a slowdown in GDP growth compared with 2017.
Experts fear that a recession in the United States will lead to a serious drop in company profits. This is evidenced by the deterioration of several stock indices. In particular, in December 2018, the SP 500 and Dow Jones Industrial fell by 15%. Now, these figures have recovered, thanks to positive forecasts for economic growth (although it is expected to be slow), the refusal of the Fed interest rate hike and progress in negotiations between the USA and China, which are close to ending the trade war.
A recession in the United States is not expected until 2020, perhaps in 2021. By that time, the country will break the record for the duration of economic growth. For this, it is necessary to demonstrate GDP growth during the first two quarters of 2019, which is beyond doubt among experts. The previous maximum growth period was 9 years and 11 months. It began in April 1991 and ended in March 2001.
However, this is also one of the factors pointing to the imminent recession. As you know, the economy moves in waves, then accelerating growth, then slowing it down. The average time of sustained economic growth to a slowdown is 8-10 years, which is typical for the United States. In June 2019, exactly 10 years will have passed since the exit from the previous recession, and the improvement in performance will continue at least until the end of 2019. However, in 2020, experts expect a slowdown in the economic growth of at least 1.8%.
Expect a deterioration of the situation this year is not worth it. Analysts are confident that if we succeed in concluding a trade deal with China, there will definitely not be any prerequisites for this.But there are serious risks for the US economy in the short term. The country’s financial and economic departments need to look for options now to avoid a recession.
