On May 27, the National Association of Business Economics came out with its latest survey results of economists on where they see the economy heading.
• Economic activity is expected to continue to decline during the second (current) quarter, “making for the most severe economic contraction in over half a century.”
• “The near-term weakness is largely due to a sharp retrenchment in business investment.”
• Positive growth generally is expected in the second half of 2009, but at a sub-par rate.
• The unemployment rate is expected to climb to 9.8 percent by the end of the year.
• Real GDP growth is expected to return to its historical trend in 2010, and “inflation is expected to moderate.”
Economic growth should resume sometime in the second half of 2009 or in early 2010. However, given the anti-growth public policy climate, growth should be underperforming – particularly private sector real GDP growth – for some time. For good measure, the rapid increase in the money supply eventually will push inflation higher.
The nation desperately needs pro-growth tax and regulatory relief, along with monetary policy geared to maintaining price stability. Unfortunately, we are getting none of the above.
Raymond J. Keating
Small Business & Entrepreneurship Council