Amid moderate economic growth expectations, U.S. economists are divided on the Fed’s next move, finds a survey published by the U.S. Securities Industry and Financial Markets Association (SIFMA).
The trade group published the latest edition of its biannual survey of the chief economists of U.S. and global broker dealers, which indicated that the median forecast for GDP growth in 2019 is 2.2%, slowing to 1.8% in 2020.
“Despite the markdown in 2020 GDP growth, the economy is still expected to expand at a moderate pace,” said Ellen Zentner, managing director and chief U.S. economist for Morgan Stanley, and chair of SIFMA’s economic advisory roundtable.
The probability of recession in the next 12 months remained at 25%, SIFMA reported. Over the next 24 months, the probability is 40%.
Economists are somewhat split on the next move by the U.S. Federal Reserve, the survey found.
It reported that 50% believe the Fed’s next move will be to raise rates, while 44% expect a rate cut, and 6% see the Fed remaining on hold for the foreseeable future.
SIFMA reported that if the next decision made by the Fed is to increase rates, 88% of survey respondents said they believe it will happen after 2020.
If the next move is to lower rates, 43% expected it to come in the second quarter of 2020, and 29% expected it to happen both in the fourth quarter of 2019 and the first quarter of 2020.
The key risks to the economic outlook — both on the upside and the downside — were seen as trade uncertainty, global growth, and U.S. political uncertainty, SIFMA noted.