US Economy Under Pressure: Trade Truce with China Doesn't Save the Situation - Survey.

US Economic Prospects Unstable Despite Truce in Trade War

The latest Reuters survey of economists confirmed that the economic prospects of the United States remain weak even after a temporary easing of tensions in US-China trade. The 90-day truce aimed at limiting high tariffs between the two countries has had little effect on the recession threats facing the US economy. Additionally, ahead of the Congressional vote on President Trump's massive tax cut bill, the financial situation in the US is worsening.

According to the survey conducted by Reuters from May 14 to 21, more than half of economists believe that the Trump administration's policies are detrimental to the economy, with over 55% indicating that these effects are significant. The deterioration in financial market conditions underscores the risks associated with a significant deficit reduction that may occur without radical changes in government strategy.

'Moody's is likely sending a signal that the proposed tax bill is financially wasteful... if there is no drastic shift, there is a risk that by the Time Washington seriously addresses the financial problems of the US, tariffs may be the only lever available for significant deficit reduction' - said Aditya Bhave, economist at Bank of America.

Recession Still Threatened, However Less Likely

According to forecasts, the economy, which contracted by 0.3% in the last quarter, is expected to grow by 1.5% in the current quarter. However, for the year overall, US economic growth is expected to slow significantly compared to the previous year. A slight growth of 1.5% is also projected for next year.

While the probability of a recession in the US next year has dropped to 35%, the resurgence of inflation and tariff policy pose elevated risks for the economy. The Fed is not rushing into a decision to cut interest rates, indicating challenging conditions for making such a decision.

Analysis

Information provided in the news indicates that the economic stability of the United States remains in serious doubt due to a number of negative factors, such as the trade war, tax policy, and the risk of recession. Although some indicators show certain improvements, the overall picture leaves much to be desired, which could affect the economic situation in the US in the near future.