Growth Seen Hitting 3% in 2018, But Risks to Outlook Mount After This Year

After 2018, economists in Wall Street Journal survey fret about fading fiscal stimulus, higher Fed rates and trade tensions

“The tax cuts and jump in federal spending will keep the economy buzzing for another 12 months,” said Bernard Baumohl, chief economist of the Economic Outlook Group. “Beyond that, however, I expect to see dark clouds forming that would signal a recession is near.”
.. Mr. Baumohl isn’t alone in a dour outlook after the boost from last year’s tax cuts begins to fade and because rising tariffs between the U.S. and its trading partners could lead to repercussions for the economy. Businesses that were enthused about the tax relief could hold off from hiring and investing in the face of trade uncertainty, several economists said.

.. The average forecast for growth in 2019 was 2.4%, little changed in recent months. By 2020, the average forecaster projects economic growth will slow to 1.8%, down from estimates earlier this year of 2%.
.. Inflation, as measured by the consumer-price index, is forecast to remain above 2% through 2020
.. While the immediate outlook for the rest of 2018 is strong, economists see an 18% chance of a recession beginning in the next 12 months. Those are the highest odds since President Trump’s election 21 months ago.

.. The economists in the survey placed the odds of a Nafta pullout at about 29% and the odds of auto tariffs at 31%.