Despite some improvement in the economic outlook, respondents to the June CNBC Fed Survey continue to forecast weaker growth and higher inflation than they did at the beginning of the year and most say uncertainty over tariff policy remains high.
The probability of a recession in the next year has fallen to 38%, down from 53% in May, but above the 23% level of January before President Donald Trump’s aggressive tariff policy was unveiled.
Similarly, gross domestic product is now expected to grow 1.13% on average, up from 0.8% in the prior survey, but less than half the January expectation.
Respondents say there remains a considerable lack of clarity with 71% reporting they are very or somewhat uncertain over trade policy.
“Recent geopolitical events in the Middle East add uncertainty into an already uncertain environment on trade, tax policy, and with potentially weakening hard macroeconomic data pending,” said Doug Gordon, senior portfolio manager at Russell Investments. “Recession can be avoided, although this will require some help in mitigating some of these sources of volatility.”
The help, he said, comes from trade deals and tax policy, with 29% saying the current tax bill in Congress makes them more optimistic about growth and 29% say it makes them more pessimistic; 43% say it has no effect on their growth outlook.
Yet 82% believe it will “somewhat” or “significantly increase” the federal budget deficit.
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