Slower growth but no recession and slightly higher inflation are key expectations of SIMFA's biannual survey of chief U.S. economists of SIFMA member firms.
Economists expect GDP growth will slip to 1.8% in 2020 from 2.2% on a fourth quarter over fourth quarter basis with the odds of recession at 25% in 2020, the same odds in SIFMA's midyear economic survey.
U.S. trade policy is the key risk to the outlook on both the downside and upside, according to Ellen Zentner, chair of SIFMA's Economic Advisory Roundtable and the chief U.S. economist at Morgan Stanley.
Eighty percent of respondents expect the U.S. and China will eventually agree on Phase 1 of a trade pact and 64% expect such an agreement could yield as much as 20 basis points of GDP growth — the same amount they say was lost this year as a result of the U.S.-China trade war. The negative impact has been concentrated on "externally exposed sectors" such as investment and exports rather than domestic sectors, according to Zentner, who held a conference call with reporters.
In addition to trade issues, global growth and U.S. political uncertainty are among the top risks economists see for 2020.
They expect the unemployment rate will rise slightly to 3.7% in 2020 from an expected 3.6% in 2019 (it fell to a 50-year low of 3.5% in September, which it repeated in November), while payroll growth slows to an average 139,000 per month in 2020, down 15% from 163,000 in 2019.
