In response to recent volatility in the stock market, rising prices (and declining yields) for U.S. Treasury bonds, and difficulties in the trade relationship between the United States and China, some pundits and politicians are forecasting a recession in the U.S., timed to coincide with the 2020 presidential election. The increasing volume of these forecasts is driven partly by partisan hopes that an economic slowdown gives Democrats the best opportunity to defeat President Trump next year. But hopes of this kind do not make for sound economic forecasts.
None of the major institutional forecasters is looking ahead to a recession in 2019 or 2020. The Conference Board, while recognizing risks to the economy, is still forecasting real GDP growth of 2.3 percent in 2019 and 2 percent in 2020. The International Monetary Fund, in a July report, forecasts global growth to expand to 3.5 percent in 2020, with the U.S. economy expected to expand at 1.9 percent. The most recent forecast of the Federal Open Market Committee calls for 2 percent growth in real GDP in 2020, compared with 2.1 percent in 2019. This is the conventional wisdom, to be sure, and such wisdom has often missed the mark, as we saw in 2007 and 2008. Nevertheless, these projections come from current economic indicators, none of which is signaling a recession in the months ahead.
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