Economists believe the decline will only get worse

The National Association for Business Economics said in a survey published Monday that US GDP growth next year will fall below 2% for the first time since 2016. In the previous survey, the consensus expectation for next year was 2.1% – now it has fallen to 1.8%.

Although the 54 surveyed economists do not yet expect a recession, the door forecast is the latest example of a downturn no longer just an expectation. It is here now, and it will probably stay.

However, when put into perspective, the economy is not in bad shape.

For example, fewer jobs than expected were added in September, but America is near full employment. It makes sense for job growth to slow down: With 3.5% unemployment, the lowest since December 1[ads1]969, there aren't enough people available to fill open positions.

The economy is still "in a good place," Fed Chairman Jerome Powell said Friday. It certainly is. This is the longest expansion of the US economy on record, and it continues – only at a slower pace.

The Fed has raised interest rates twice so far this year to keep growth going. But monetary policy expectations for the rest of 2019 are everywhere. NABE economists are split, and 40% expect a new interest rate cut this year. Three-quarters of them expect an interest rate cut by the end of 2020.

By comparison, market expectations call for a 78% chance of a quarterly cut this month, and a nearly 90% chance of a decline in December, according to CME FedWatch Tool.

But interest rate cuts or not, the trade war is still a real risk to the economy.

"Progress in protectionism, pervasive trade policy uncertainty, and slower global growth are considered major drawbacks to risk," said Gregory Daco, chief economist at the United States economist at Oxford Economics and NABE research director.

The US-China trade war uncertainty poses to overall growth and individual sectors such as industry, which depend on both global demand and materials from abroad, are enormous.

Financial markets have been turned around by headlines all year, with stocks rallying at the slightest sign of hope for a trade and then dropping with the next escalation. If the trade war was out of the way, the outlook for the economy could look very different.

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