Economists see a slight decline in inflation in the US this year, as a result of the temporary duty reduction agreement between the US and China -in order to hold talks aimed at concluding a balanced trade relationship -a development that also mitigated the possibility of a recession.

Bloomberg May participants estimate that the personal consumer costs index – which is the preferred Federal Reserve index to develop inflation – will culminate at 3.1% at the end of this year, slightly lower than 3.2% in April.

The survey was conducted from May 16th to May 21st and a total of 86 economists participated.

In addition, they reviewed lower their estimates of the consumer price index until the beginning of next year.

Senate estimates of the respondents give a chance of 40% for a recession over the next 12 months – a rate of less than 45% predicted last month, but again significantly higher than the 30% they gave in March.

At the same time, however, they slightly “squeezed” their forecasts for the US GDP growth rate, now expecting “mild” growth by 1.3% in 2025.

The Trump government has agreed earlier this month to drastically reduce the duties it has imposed on China imported products while officials on both sides are negotiating a possible trade agreement between the two mines on the planet.

However, again, duties are significantly higher than those that were in place before Donald Trump’s return to the Oval Office – and the sluggish consumer has been concerned about US companies about what is to come.

“The highest duties are going to hurt growth and increase inflation, but they are less likely to lead to a recession, a fear that existed last month,” notes Comerica Bank economists Bill Adams and Bara Bahrightan, adding that “duties”.

A positive contribution to GDP will be the highest reduction in imports – especially in the current quarter, according to the survey. Earlier this year, US imports ran at the fastest pace over almost five years, as businesses accelerated imports of goods to prevent them from bringing them to the US before the duties came into force, which led to the first negative change of US GDP by 2022.

At the same time, economists estimate the majority that the consumer appetite of American households will maintain its potential despite growing uncertainty. Specifically, they predict that consumer spending will increase by 1.5% in the second quarter of the year, ie more than the 1% waiting in April. However, they are then expected to slow down.

But their estimates of business costs are not so optimistic. Economists predict that private investment will decline by 5.2% in the current quarter, that is far more than a 3% reduction in April. They have also cut their provisions for private investment by the middle of next year.

“US-China and US-United Kingdom Agreements are steps in the right direction, but uncertainty remains,” notes Hondounbi, a head economist at Huntington Private Bank, adding: “We are expecting a slowdown in consumer spending and investment.