Despite further policy easing expectations, the median forecast of the August 6-8 survey shows that the U.S. economy is 45% more likely to fall into recession in the next two years, up from 35% in the previous survey, the highest level since the survey first asked the question in May 2018.
A closely watched debt market indicator measuring the risk of a U.S. recession issued the strongest warning signal since March 2007 Monday, highlighting concerns that the impact of the Sino-U.S. trade war will accelerate the global economic downturn.
U.S. President Trump said last week that he would impose a 10% tariff on another $300 billion of Chinese imports to the United States from September 1. The U.S. government also listed China as a currency manipulator on Monday.
The People's Bank of China said Tuesday that the U.S. Treasury's listing of China as a currency manipulator "seriously undermines international rules, will have a significant impact on global economy and finance" and will also hinder global economic recovery.
Nearly 70% of analysts who answered an additional question said recent developments had brought the United States closer to the next recession.
"Of course, the escalation of trade tensions caused by tariff increases and market access restrictions is impacting confidence, increasing costs, damaging supply chains and weakening profitability," wrote James Knightley, chief international analyst at ING.
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