US Economic Survey, Mid-Year 2019

The SIFMA Economic Advisory Roundtable brings together Chief U.S. Economists of over 20 global and regional financial institutions. The twice-annual U.S. Economic Survey compiles economic forecasts from roundtable members, published prior to the upcoming Federal Open Market Committee (FOMC) meeting. This report analyzes economists’ expectations for: GDP growth, unemployment rate, inflation rate, interest rates, etc. It also reviews expectations for policy moves at the upcoming FOMC meeting, as well as discussing key macroeconomic topics and how these factors could impact monetary policy.

Compared with the December survey, the economists surveyed decreased their GDP growth estimates for 2019 to a median forecast of 2.2%, on a fourth quarter over fourth quarter basis.

“The current outlook for 2019 has decreased to 2.2% GDP growth,” said Ellen Zentner, a Managing Director and Chief U.S. Economist for Morgan Stanley, and chairman of SIFMA’s Economic Advisory Roundtable. “U.S. trade policy and China’s deteriorating economic conditions were among the most important considerations in the forecast change, as they pose the greatest downside risks to the U.S. expansion.” The 12-month probability of recession was seen at 25% by the median participant, rising to 42.5% over the next 24 months.

The Economy

Economists see growth in real personal consumption slowing from 2.6% in 2018 to 2.2% in 2019 and further to 1.9% in 2020. The slowdown comes despite an expected increase in average hourly earnings from 3.0% in 2018 to 3.3% in 2019 and 3.5% in 2020.

On the labor side, economists expect the unemployment rate to increase only slightly to 3.7% in 2020, after an expected 0.3 percentage point decline in 2019 to 3.6%. Employment growth (average monthly change in non-farm payroll employment) is expected to slow in 2020 to 130,000 from a peak year in 2018 of 223,000.

In terms of inflation, as measured by the personal consumption expenditures (PCE) deflator, respondents expect inflation excluding food and energy (so-called ‘core’) to reach 2.0% in 2020, from an expected 1.7% in 2019.

Monetary Policy

65% of respondents believe the Fed’s next move will be to cut rates, while 35% expect an increase in interest rates. If a rate cut is the next move, 38% of respondents expect it to occur in the second half of this year. If a rate hike is the next move, 27% of respondents expect it to come in 2020, but they were evenly divided on whether the hike would be delivered in the first or second half of the year. Respondents believe the Fed’s terminal rate in this cycle will be 2.4%, unchanged from where it is now.

Inflation considerations ranked highest among factors in the Fed’s decision to both raise rates and cut rates. Labor market conditions and other economic activity measures were nearly as important. Surprisingly, though trade and China growth were listed as top reasons for the downgrade to GDP growth in 2019, financial developments and global economic developments were last on the list of the most important decisions for the Fed to cut or raise rates.

Interest Rates and Credit Markets

Respondents expect the federal funds rate to remain unchanged at 2.375% through the second quarter of 2020. In general interest rates elsewhere were expected to rise into mid-2020. The two-year UST is expected to fluctuate in 2019 and 2020 between 2.280% and 2.315%, while the 10-year UST is expected to increase from 2.460% in the second quarter of 2019 to 2.640% in the second quarter of 2020. The 30-year mortgage is forecasted to climb from 4.120% in the second quarter of 2019 to 4.510% in the second quarter of 2020.

Respondents also gave expectations for various yield spreads. 71% expect the yield curve to increase, and 58% expect the TED spread to increase. 50% believe the investment-grade corporate bonds to U.S. Treasury spread will increase. Finally, 58% expect the high yield corporate bonds to U.S. Treasury spread to increase.

Legislation and Debt Ceiling

All respondents expect no major legislation during the upcoming election cycle.

92% of respondents expect the debt ceiling to be suspended and budget caps raised, followed by 8% forecasting budget caps will be raised but fall short of the same amount as in the 2018 fiscal year. For those economists building the debt ceiling into their GDP forecasts, all expect the debt ceiling to lower GDP growth between 0 and 20 basis points (bps). 77% of respondents do not build an impact from the debt ceiling into their models.

Tariffs on Products from China (and Elsewhere)

80% of respondents believe tariffs levied on products from China (and elsewhere) have impacted 2019 GDP growth by lowering the forecast from 0-20 bps, followed by 13% of respondents expecting lower GDP growth by greater than 20 bps. As to the impact on prices, 69% of respondents believe tariffs raised prices by 0-20 bps. Additionally, 63% of respondents believe the U.S. will not raise auto tariffs during the forecast horizon, while 7% of respondents believe the U.S. will raise auto tariffs.

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Ellen Zentner, Managing Director and Chief U.S. Economist for Morgan Stanley and Chair of SIFMA’s Economic Advisory Roundtable, discusses key findings from the mid-year 2019 survey.

Full Report

Continue reading for more survey results and a reference guide on the U.S. economic landscape.




  • Katie Kolchin, CFA
  • Sharon Sung
  • Justyna Podziemska

Economic Advisory Roundtable

  • Chair: Ellen Zentner, Morgan Stanley & Co., Inc.
  • Ethan Harris, Bank of America-Merrill Lynch
  • Michael Gapen, Barclays Capital Inc.
  • Nathaniel Karp, BBVA Compass
  • Douglas Porter, BMO Financial Group
  • Andrew Hollenhorst, Citigroup
  • Michael Carey, Credit Agricole
  • James Sweeney, Credit Suisse AG
  • Michael Moran, Daiwa Capital Markets America, Inc.
  • Brett Ryan, Deutsche Bank Securities Inc.
  • Christopher Low, FTN Financial
  • Jan Hatzius, Goldman Sachs & Co.
  • Ward McCarthy, Jefferies & Co., Inc.
  • Michael Feroli, J.P. Morgan Chase & Co.
  • John Lonski, Moody’s Analytics, Inc.
  • Lewis Alexander, Nomura Securities International, Inc.
  • Carl Tannenbaum, Northern Trust
  • Augustine Faucher, PNC Financial Group
  • Scott J. Brown, Raymond James & Associates, Inc.
  • Tom Porcelli, RBC Capital Markets, Inc.
  • Stephen Gallagher, Societe Generale Corporate and Investment Banking
  • Lindsey Piegza, Stifel Financial Corp.
  • Seth Carpenter, UBS Investment Bank
  • John Silvia, Wells Fargo Securities, LLC