Some advice for President Barack Obama's successor: Bring a plan to fight the next recession.
That's one conclusion drawn from a survey of economists Sept. 4-9, where the median forecast of 31 respondents has the next downturn occurring in 2018.
Assuming the collective wisdom of economists is right—which is a generous assumption given that predicting business cycles isn't exactly a cakewalk—it puts the current expansion on track to have a lifespan of about nine years. That's a pretty good run, though the honor of the longest expansion on record would still belong to the decade that ended in March 2001.
The current recovery has already beaten the postwar average of just under five years, mostly because improvement in the economy has been so slow. Payrolls only started to really pick up last year, and growth, while steady, hasn't been anything to write home about. Economists expect the U.S. to expand at a 2.5 percent annualized rate this year, just a tick above last year and much slower compared with growth in other recoveries.
The survey also suggests that the next U.S. president will have just one calendar year to get settled before a downturn occurs. They may want to solicit some advice from Obama, who took office in January 2009, during the deepest recession in the post-World War II era.
Economists said there's a 10 percent chance of a U.S. recession within the next 12 months, according to the median of the survey. While the median is usually a good gauge because it's less influenced by outlier responses, the survey's average showed an interesting uptick. Looking at that metric, the odds of a U.S. recession in the next year climbed to an average 13 percent, the highest since economists were surveyed in December 2013.
That may have something to do with the volatility that's been roiling global markets of late, not to mention the Federal Reserve's first interest rate increase since 2006 coming as soon as next week. Some economists worry that it's too early to start tightening policy, which carries the risk of crimping growth.
Meanwhile China, the world's second-largest economy, is slowing, and other emerging markets such as Brazil, South Africa and Russia are also struggling. Commodity prices, trade and inflation are all sluggish. And growth in developed economies may not be strong enough to help keep the world from slipping into a contraction. All that was enough to prompt Citigroup Inc.'s chief economist, Willem Buiter, to assign a 55 percent chance to some form of global recession in the next couple years.