U.S. recession fears tick up amid escalating China trade war

President Trump's latest round of tariffs on Chinese goods and decision to brand China a currency manipulator, followed by China's scrapping new purchases of U.S. agricultural goods, will hurt the economies in both countries, economists warn. A Reuters survey of economists conducted Aug. 6-8 and released Friday found that about 70 percent said the latest salvos in the escalating trade war have brought the next U.S. recession closer, 45 percent of economists surveyed said the U.S. economy will slip into recession within the next two years, and a majority predicted that the Federal Reserve will cut rates again in September and then at least once more this year.

Trump frequently complains that the Fed's rate increases have been hurting the economy and stifling growth, but a New York Times analysis Friday shows that the Fed "has kept interest rates lower than under any other president since Jimmy Carter, when adjusted for the economy's output and inflation," and "Congress has provided an unusual level of fiscal support." Those combined stimulus measures have buffered the economy against damage from Trump's tariffs and China's retaliatory measures, "but as the dispute escalates, that insulation may not be enough," the Times says. Economists warn "that the Fed, in particular, has only so much help to give."

Also Friday, the International Energy Agency reported that global demand for oil in the first half of 2019 was the weakest since 2008. The IEA also downgraded its forecasts for global oil demand — a barometer of the world's economic health — citing U.S.-China trade tensions.

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