In a sharp change toward a darker outlook, respondents to the CNBC Fed Survey have boosted the chance of recession next year to the highest level of the Trump presidency, reduced their support for the president's handling of the economy and lowered their outlook for economic growth and Fed rate hikes — with some even flirting with the idea of a rate cut in 2019. Still, many of the 43 respondents, who include economists, fund managers and strategists, also argued that the market has overdone it to the downside. "The notion that downgraded growth prospects are driving the stock market sell-off is backwards," wrote Mike Englund, chief economist, Action Economics. "Stock price declines have driven the growth slowdown narrative, which thus far faces little confirming evidence from actual U.S. economic reports." Still, the chance of recession in the next 12 months rose to 23 percent, the second straight increase, and up from 19 percent in the prior survey. That's higher than the 19 percent long run average for the 7-year-old survey and 9 points higher than the low of the Trump presidency. WATCH: How the Fed could cause the next recession, according to Gary Shilling

Rate cut?

"Traditional signals of a U.S. recession from the shape of the yield curve to a fall in housing investment to corporate bond spreads are suggesting a recession in late 2019/early 2020," wrote Constance Hunter, chief economist at KPMG, in response to the survey. Hunter was among the 12 percent of respondents who think the Federal Reserve, after hiking in December, would next move to reduce the Fed Funds rate and do so by October. While the percentage is small, no forecasters predicted a 2019 rate cut in the September survey. And while the tone of responses is more negative, 63 percent of those surveyed believe the recent market sell-off reflects too pessimistic a view of the outlook, with about a third saying the market has it right. Just under 60 percent say the current low level of the spread between the yields on the 2-year and 10-year notes does not signal a recession. "Market growth signals right now are out of line with economic fundamentals on our reading of both,'' wrote John Ryding, chief economist at RDQ. "A resolution of trade uncertainty should encourage corporations to respond more strongly to the tax changes of December 2017 and boost capex." But Jim Bianco, president of Bianco Research, said the yield curve is "a signal the Fed is too tight and the risk of breaking the economy is rising." Asked how different factors have contributed to the recent sell-off, respondents named "tariff concerns" as the most significant followed by worries about global economic weakness and more Fed rate hikes. Sixty-seven percent expect that the current trade talks between China and the U.S. will end on March 1 with an agreement to continue talking and without the imposition of additional tariffs. On average, however, the group expects tariffs to subtract 0.2 percent from growth in 2019, double the estimate from the September survey. WATCH: The Next Recession: Europe could 'infect us' says Richard Fisher

Tariff hit