A new survey suggests U.S. economic growth is set to slow sharply this year and next, and weaker global growth and tariffs are seen as the major culprits.
The CNBC Fed Survey for March shows the average forecast for gross domestic product growth this year is just 2.3%, down from 2.4% expected in the January survey and a further slowing from the actual 3.1% year-over-year pace for the fourth quarter of 2018. The poll also shows economic growth is seen stepping down below 2% in 2020.
Asked about the biggest threats to the U.S. expansion, respondents replied slowing global growth and protectionist trade policies ranked first and second.
A weak outlook for growth abroad knocked about 40 basis points (or 0.4 percentage points) off of GDP forecasts this year, according to respondents, who include economists, fund managers and strategists. Tariffs — both those put in place by the Trump administration and retaliatory tariffs from other countries — are estimated to take another 20 basis points off of growth.
The good news is that most respondents expect a US/China trade deal this year. While 79% expect a deal, just 2% see a new round of tariffs and 17% expect a continuance. That suggests, however, that a deal could be baked into the stock market.
