U.S.-China trade war increases recession likelihood, analysts say

U.S.-China trade war increases recession likelihood, analysts say

The problem isn’t so much that stocks keep falling. It’s why they keep falling. The Dow Jones industrial average dropped another 1.5 percent on Monday to close down 5 percent off its all-time high of a month ago. That retreat on its own should be too meager to stir serious concern among investors. But Wall Street economists increasingly say the U.S.-China trade war driving the sell-off poses a more serious risk than they have given it credit for. Some are now downgrading their projections for economic growth at home as a result and even raising their projections for the likelihood of a recession. "Fears that the trade war will trigger a recession are growing," Goldman Sachs chief economist Jan Hatzius wrote in a Sunday note. His team estimates the conflict will shave 0.6 percent off U.S. economic growth, and it just downgraded its estimate for fourth-quarter GDP growth to 1.8 percent, well below the 3 percent rate of expansion President Donald Trump has promised. Goldman isn’t alone. UBS economists now see growth stalling at 2 percent for the rest of this year before slowing further to 1.5 percent in the first half of next year. The firm also sees joblessness rising by nearly a half-point to 4 percent by the end of next year. And while the economic brains at the big banks still put long odds on the U.S. slipping into a recession in the near-term – in part because they expect the drag from the trade war […]

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