Corporate economists see slower U.S. growth ahead

• Economists at businesses see America’s growth rate slowing over the coming 12 months.
• Only 53 percent now see the economy expanding more than 2 percent this year, down from 67  percent in January’s survey.
• Among economists whose companies produce goods, 75 percent said President Trump’s tariffs were a negative.
• Fifty-two percent report shortages of skilled labor at their firms, a sign of wage pressure.

A survey of corporate economists predicts the U.S. economy will expand over the next year, although the pace of growth will decline. The economists also said employers are facing pressure to raise wages, spend more on worker training and automate tasks because of the low unemployment rate.

Just 53 percent of the economists polled for the National Association for Business Economics’ April survey, released Monday, expect the economy to grow by more than 2 percent this year, down from 67 percent who felt that way in January. The results from the survey released Monday suggest a sharp slowdown after the Commerce Department reported Friday that U.S. GDP expanded at a stronger-than-expected 3.2 percent during the first quarter.

 “The results of the April 2019 NABE Business Conditions Survey indicate that all respondents still expect the economic expansion to continue within the next 12 months,” Sam Kyei, NABE Business Conditions Survey chair and chief economist at SAK Economics, said in a statement. But Kyei added: “The share of respondents expecting slower growth at or below 2% jumped to nearly half from about a third in the previous survey.”

The economy grew quickly during the first three months of 2019 because of a surge in company inventories and a shrinkage in the trade gap, temporary factors that are likely to fade. Businesses increased imports at the end of 2018 out of concern that President Donald Trump could further escalate tariffs against China, but the administration held off to conduct trade talks with the world’s second-largest economy.

A drag from tariffs

However, the NABE survey found that the tariffs already imposed by Mr. Trump have been a drag on growth. For economists whose companies are involved in goods producing, 75 percent said the import taxes were a negative.

Still, sales and profit margins were rising in 32 percent of the corporate economists’ firms, up from 23 percent previously. “At the same time,” said Kyei, “materials input costs remain elevated at respondents’ firms, especially goods-producing firms. Fifty-two percent of survey respondents report shortages of skilled labor at their firms,” a sign of wage pressure.

The survey contains responses from 116 NABE members to a questions about business conditions in their firms or industries. It was conducted between April 1 and April 10 and reflects first-quarter results and the economists’ near-term outlook.