US growth outlook set to weaken for this year, says 106 economists in a survey

A smaller percentage of business economists are optimistic on a ‘robust economic growth’ for the United States (US) in the year ahead compared to the previous survey, a quarterly National Association for Business Economics (NABE) survey released on Monday has revealed.

The survey which polled 106 economists showed that around two-thirds of the respondents expect economic growth for the US to exceed 2% this year. But that share is smaller than 90% of respondents who voted for the same question in the previous survey.

But the situation is not dire, as most respondents do not expect a recession to take place within the next 12 months, a prediction that is likely to quell fears in the markets. Most of the respondents were confident of a positive real gross domestic product (GDP) growth, also known as inflation-adjusted GDP, to remain positive for the year.

The survey was conducted between December 17th and January 9th, and it reflects the fourth-quarter results and the near-term outlook.

Shortage of labour faced, and trade tensions not affecting hiring

Other highlights in the survey showed that 53% of the respondents reported shortages of skilled labour at their firms. This is the most since October 2000 and an increase from the reading of 47% in October.

Meanwhile, 77% of the respondents said the trade concerns have not caused their companies to change investment, hiring, or pricing to their offerings. The reading was similar to the earlier survey.

After a year of robust capital spending, business investment has cooled a bit, and expectations for the next three months slackened similarly, said NABE President Kevin Swift, CBE, chief economist at American Chemistry Council.

‘Indeed, the capex story is really a tale of two cities. Fewer firms increased capital spending compared to the October survey responses, but the cutback appeared to be concentrated more in structures than in information and communication technology investments,’ Mr Swift said.

NABE business conditions survey chairperson Sam Kyei, who is also chief economist at SAK Economics commented: ‘Fewer survey respondents report rising sales at their firms in the fourth quarter of 2018 compared to the third quarter. Profit margin increases became significantly less widespread in the fourth quarter of 2018. Materials input costs are rising at respondents’ firms, especially goods-producing firms.’