During a question and answer session with reporters on Sunday, Washington Post White House bureau chief Philip Rucker told President Donald Trump that “a lot of economists say that you should be preparing for a recession.”
Trump responded that he is “prepared for everything,” but that “I don’t think we’re having a recession.”
Speaking to reporters before he boarded Air Force One in New Jersey, Trump pointed to Walmart’s strong second-quarter earnings as a sign that consumer spending is healthy. Then he said, “And most economists actually say, Phil, that we’re not going to have a recession. Most of them are saying we’re not going to have a recession.”
Facts First: We don’t have data on what every economist thinks. But prominent bank economists have warned this month of a significant risk of a coming recession, and a survey of business economists, mostly conducted in July, found that 74% thought there would be a recession by 2021.
The US is still in its longest uninterrupted economic expansion ever; nobody knows for sure if or when a recession might hit. And since we don’t have comprehensive data on economists’ views, we can’t declare Trump’s claim about “most” of them false.
But multiple economists have said this month that the possibility of a recession is real and growing.
Recession concerns have intensified since the beginning of August. During this month, the chances of a quick trade deal with China have appeared to shrink, several major countries have reported poor growth, stock markets have declined, and the yield curve on US bonds (briefly) inverted for the first time since the pre-recession year of 2007. (Here’s an explainer on curve inversions.)
Last week, Bank of America’s head of US economics, Michelle Meyer, said in a note to clients: “Our official model has the probability of a recession over the next 12 months only pegged at about 20%, but our subjective call based on the slew of data and events leads us to believe it is closer to a 1-in-3 chance.”
“Fears that the trade war will trigger a recession are growing,” Goldman Sachs chief economist Jan Hatzius said in his own note last week.
Bruce Kasman, chief economists for JPMorgan Chase, told Bloomberg this week that there is a 40% to 45% chance of a recession in the next 12 months.
It’s important to note that others have sounded more optimistic – including Goldman Sachs chief executive David Solomon, who told CNN in an interview last week, “I think at the end of the day, the underlying economy, as we discussed, is still doing okay. I think the chance of a recession in the near term is still relatively low. But we have to watch what’s going on with tariffs.”
Still, 74% of economists who responded to a new National Association for Business Economics survey said they thought there would be a recession by the end of 2021.
The NABE survey, conducted from July 14 to August 1, found that 2% of the 226 economists who responded to the survey expected a recession to begin this year; 38% expect it to begin in 2020. Thirty-four percent expected a recession to start in 2021, while 14% said it would start later than 2021. An additional 12% did not express an opinion.
Caution is warranted. The survey period mostly took place before the Federal Reserve cut interest rates on July 31. And NABE simply distributes the survey to 1,780 members of the organization, regardless of their level of experience or their position, then tallies the responses of the people who choose to participate.
But we can say for sure that a significant number of economists are not nearly as sanguine about the chances of a recession as Trump made it seem.