Economists surveyed by the National Association for Business Economics lowered their growth projections for the US economy in 2018, the association announced today. The median forecast calls for inflation-adjusted real GDP growth of 2.8% this year, down from the March 2018 estimate of 2.9%. However, panelists also increased their forecast for nonfarm payroll growth.

“NABE Outlook Survey panelists are slightly less optimistic about the US economy in 2018 than they were three months ago,” said Kevin Swift, VP at NABE and chief economist at American Chemistry Council. “However, they are much more positive about the prospects for industrial production — anticipating 3.8% average growth in 2018, up from the 3.3% gain forecasted in March, and up significantly from the 2.3% forecasted in the December survey.”

Swift also noted that 57% of panelists believe that risks to real GDP growth in 2018 are weighted to the downside, and nearly 71% believe the risks to inflation are weighted to the upside.

“In large part, the growth prospects appear to be related to federal fiscal policies,” said Steven Cochrane, NABE survey analyst and managing director at Moody’s Analytics. “The median estimate of the impact on real GDP growth resulting from fiscal policy changes is an increase of 0.4 percentage points in 2018 and 0.3 percentage points in 2019, but nearly 76% of respondents believe that current trade policies will have a negative effect.”

Half of the panel expects the next recession will occur sometime between the fourth quarter of 2019 and the second quarter of 2020. One-third suggested a later timeframe after the fourth quarter of 2020.

Panelists also now forecast nonfarm payroll growth to average 192,000 jobs per month in 2018, up from 184,000 in the March survey. However, panelists forecast a decline to 154,000 jobs per month in 2019.

The average unemployment rate for 2018 as a whole is expected to be at its current 3.9% level, unchanged from the prior forecast. On a quarterly basis, the median forecast reflects a further, slight decline to 3.8% in the third and fourth quarters of 2018, before settling at 3.7% throughout 2019.

The median forecast for hourly compensation growth in 2018 edged up to 2.8% from 2.7% in the March survey, but remains higher than the 1.5% actual increase in 2017. Wage compensation is expected to firm further in 2019 to a 3% annual average growth rate in 2019.

NABE is a professional association for business economists and others who use economics in the workplace. The survey included 45 professional forecasters and was conducted between May 9 and May 16, 2018.