The recent escalation in the U.S.-China trade war has brought forward the next U.S. recession, according to a majority of economists polled by Reuters who now expect the Federal Reserve to cut rates again in September and once more next year.
Despite expectations for further easing, the Aug 6-8 poll gave a median 45% probability of the U.S. economy slipping into a recession in the next two years, up from 35% in the previous poll and the highest since that question was first asked in May 2018.
A closely-watched bond market gauge of U.S. recession risk flashed its biggest warning since March 2007 on Monday, underscoring concerns the spillover from the battle between the world’s two biggest economies over trade will accelerate a global downturn.
Last week, U.S. President Donald Trump said a 10% tariff on an additional $300 billion of Chinese goods will be added, starting Sept. 1 and Washington on Monday branded China a currency manipulator.
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