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Survey of Business Economists Points to 2021 Recession

Phil Hall
Feb 25, 2019
A panel of more than 100 real estate experts and economists assembled by Zillow looked into the future and see a recession looming on the far horizon

A new survey of business economists finds nearly half of respondents predicting the U.S. will go into a recession by the end of 2020 and three-quarters of respondents forecasting an economic downturn by the end of 2021.
The survey, which polled 281 members of the National Association for Business Economics (NABE), also found 10 percent of respondents predicting a recession this year. However, 57 percent respondents stated the U.S. the economy will continue to benefit from the Trump Administration’s deregulatory agenda in during this year and next year, while 25% percent of respondents believed the administration’s deregulation efforts will negatively impact the economy and 10 felt it would have no impact whatsoever.
Furthermore, 65 percent of respondents said the Federal Reserve’s monetary policy stance is “about right,” and that the central bank was only pausing its rate hikes rather than ending them for this cycle. And of that 65 percent of respondents, 39 percent believed the upper end of the federal funds target range at year-end 2019 would be either 2.75 percent while 26 percent of respondents predicted it would be at 3 percent.
“There is a schism between what the NABE panel and the markets think about the Fed’s rate path and the shrinking of its balance sheet,” said Survey Chairwoman Megan Greene, global chief economist at Manulife Asset Management. “The markets are pricing in no more interest-rate hikes in 2019, whereas a majority of the NABE panel expects one or two rate hikes this year. Survey results also reveal that, while investors have frequently blamed higher borrowing costs on the Fed’s quantitative tightening, the panel is inconclusive regarding the impact of shrinking the Fed’s balance sheet on short- and long-term rates.
Feb 25, 2019