That alone has taken on more significance now that growth forecasts have come down. The average estimate sees growth slowing to 2.3 percent in 2019 and 1.8 percent in 2020, down from just above 3 percent this year.
“The next recession is coming into view, but not in 2019 as deficit-financed government spending increases will support growth through much of the year,” said Mark Zandi, chief economist, Moody’s Analytics.
The uncertainty is taking a toll on respondents’ approval rating of President Donald Trump’s handling of the economy. The group has generally given the president higher marks than the general public, and that remains the case. But the numbers are lower.
Just 52 percent said they now approve of the president’s handling of the economy, down 14 points from the prior survey in which his approval had hit an all-time high. Disapproval rose 10 points to 31 percent.
“The Trump-Navarro Trade War policy is a threat to the entire global growth direction and magnitude,” said David Kotok, chief investment officer at Cumberland Advisors.
“I don’t think I’ve ever been this uncertain about my forecast. The uncertainty stems from uncertainty about tariffs and about the response of nonresidential fixed investment to both tariffs and tax reform,” said Robert Fry, chief economist of Robert Fry Economics. “If tariffs go to 25% and stay there, my growth forecast is too high and my inflation forecast is too low. If a deal is reached before tariffs go to 25%, my growth forecast is too low. …”
The S&P 500 is seen rising to just 2,774 next year, down from a prior forecast of 2,936. Still, from current levels, the increase would offer investors about an 8 percent increase. The outlook for the 10-year yield fell in 2019 fell to 3.16 percent from 3.56 percent in the current survey, a strong drop that reflects the recent decline in rates, but would still represents a slight increase from current levels.
The survey is taken ahead of each Fed decision, which is to be announced Wednesday.