Trump's trade battles are behind a huge shift in how some of America's top economists feel about the economy
- A survey from the National Association for Business Economics found that nearly 76% of economists thought that President Donald Trump’s trade policies would be a negative for the US economy.
- Only 12% of those asked thought the president’s tariffs and trade policies would boost the economy.
- The trade policies also may explain why the economists were generally more worried about downside risks in the economy going forward, according to the survey.
The National Association for Business Economics (NABE) Outlook survey asked 45 economists their forecasts over the next few quarters and how a several issues, including Trump’s trade policies, could change those projections.
- Just 12.2% of those surveyed thought Trump’s policies would end up being a net positive for the economy.
- Of those, 0% said the measures would be strongly positive.
- On the other side 46.3% said the tariffs would be marginally negative.
- 26.8% said the moves would be moderately negative, and 2.4% said they would be strongly negative.
The survey asked economists at major Wall Street banks like JPMorgan and Wells Fargo, academic economists at universities, and economists at trade groups like the Chamber of Commerce to give their forecasts through 2019. The median forecast for US GDP growth in 2018 was 2.8% in 2018 and 2.5% in 2019.
A shift in the Trump administration’s focus from stimulative fiscal policies (such as the tax bill) to the trade measures affected the economists’s view of the risks in the economy.
Fifty-seven percent of those surveyed said they believed underlying economic risks meant that US GDP was more likely to undershoot their estimates than overshoot it. Just 31% of those surveyed said the opposite. Comparatively, in March, 75% said economic risks skewed toward upsides.
“Note that the March survey was conducted when economic policy proposals were focused on tax cuts and fiscal policy in the near term,” a NABE statement said. “Since then, the discussion of economic policy has been dominated by tariffs and potential trade wars.”
Most economists predicted that the tariffs, which function as taxes on imported goods, will make costs for businesses higher overall. The increased costs to produce goods will force businesses to cut costs in other areas and slow down investment in their businesses.
In turn, the slowdown in business investment and higher costs will help slow broader economic activity, they say.
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