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NextGen Magazine

 
 

Poll of Economists Finds Odds of Recession Ticking Up

By:
Chris Gaetano
Published Date:
Aug 8, 2019
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Professional economists, in reaction to recent developments in the U.S.-Chinese trade war, have increased their expectations of a recession within the next 12 months, according to Bloomberg. This was revealed through a poll conducted by Bloomberg. Around this time last year, economists pegged the chance of a recession at around 15 percent. Today that estimate has grown to 35 percent, up from 31 percent last month. Trade tensions were cited as the primary reasons why, particularly in the wake of recent moves from China that left markets rattled earlier this week. 

The topic of another recession has been on the minds of finance watchers for many months. While the exact timing is a matter of some dispute, there seems to be a strong sentiment that some sort of fall is coming. A recent Duke University survey of chief financial officers, for instance, found more than half believing that a recession would come by the middle of next year, while 69 percent are confident this will happen by the end of next year. The National Association of Business Economics, in a pol of professional financial forecasters, found that 60 percent believe a recession will start sometime before the end of 2020, though only 15 percent believe it will start sometime this year. 

If these predictions bear out, a talk by Lester Wigler, a senior portfolio manager and financial adviser with Morgan Stanley, during the Foundation for Accounting Education's 2017 Business and Industry Conference, may have been quite prescient, as he predicted a new recession could come 5-7 years from then, and named 2020 as a year to be particularly wary. 

Wigler at that time said that business activity does seem to be on the decline, at least when looking at the Global Trade Leading Indicator, an index meant to forecast global trade dynamics based on oil and other commodity prices, shipping rates, U.S. dollars, and surveys of purchasing manager and business sentiment. Wigler believed that the the global economy was, in 2017, in the tail end of its expansionary cycle, which meant a recession five to seven years from then. This, he said, would be in line with historical trends. He added at the time that people should be cautious as we enter 2020, as companies that provide goods and services will have very weak pricing power.