CNBC Survey: US-China Deal Impacts Fed Outlook Amid Elevated Uncertainty

Survey Results Post US-China Deal

• 💡 A CNBC flash Fed survey indicates that respondents have dialed back inflation and recession concerns following a US-China trade agreement.
• ⚠️ Despite the reduction, both recession probability (41%) and inflation forecasts (3.1%) remain elevated.
• 📈 The growth outlook improved slightly to 1%, but is still considered weak.
• 📉 Unemployment forecasts are at 4.5%, which is better but still elevated.

Policy Uncertainty and Economic Impact

• ❓ Over 80% of respondents expressed uncertainty about the outlook for tariffs and their economic impact, citing policy volatility.
• 💬 One respondent noted that policy uncertainty reduces confidence and that the economic impact of even a bad policy would be lessened if it were known.
• ⏳ Uncertainty about the duration of the 90-day trade period and specific tariff impacts is a significant concern for companies.

Fiscal Policy and Fed Rate Outlook

• 📊 Forecasters are increasingly focusing on the impact of fiscal policy, with 70% finding proposed deficits larger than expected.
• 🤔 A plurality (36%) believe the current budget bill makes them more optimistic about the economic outlook, while 26% are more pessimistic.
• 📉 A majority believe recent tariff reductions on China will not influence the Fed, but 32% think it makes rate cuts less likely this year.
• ⚖️ The average forecast for the Fed funds rate by year-end is 3.9%, indicating a slightly more hawkish outlook compared to May.