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US Growth Outlook Weakens in Survey of Business Economists

Jan. 28, 2019
Business investment cools some following a year of robust capital spending.

Forecasters are less optimistic about U.S. expansion this year, though they’re nearly unanimous in their expectations that a recession can be kept at bay until at least 2020, a National Association for Business Economics survey showed Monday.

Two-thirds of respondents expect growth to exceed 2% this year, down from the 90% in the prior survey for the 12 months through the third quarter of 2019, according to the Dec. 17-Jan. 9 survey of 106 NABE members.

“After a year of robust capital spending, business investment has cooled a bit, and expectations for the next three months slackened similarly,” NABE President Kevin Swift, chief economist at the American Chemistry Council, said in a statement released along with the survey.

“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,” Swift said.

The results follow reports showing that U.S. manufacturing slumped in December, while consumer sentiment has weakened as the U.S.-China trade war and record government shutdown fuel uncertainty. JPMorgan Chase & Co. and Barclays Plc both cut their first-quarter growth projections last week, citing the effects of the partial closure.

Other takeaways from the survey showed:

  • 84% of respondents said that the 2017 Tax Cuts and Jobs Act hasn’t spurred plans to change hiring or investment.
  • 77% said trade concerns haven’t caused their companies to change investment, hiring, or pricing, similar to the prior survey.
  • 53% report skilled labor shortages at their firms, the most since October 2000 and up from 47% in October.
  • 47% said sales at their firms rose in the final quarter of last year, down from 61% in the October survey.

By Chibuike Oguh

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