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

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