Thursday, June 21, 2012
Where Do You Think the Economy Will Be a Year From Now?
Dating back to late 2007, we’ve had a deep recession and a miserable recovery. After this multi-year mess, where will the economy be a year from now?
A Rasmussen Reports survey of adults released on June 18 found that 36 percent thought that the economy would be stronger a year from now. However, 38 percent thought it would be worse, and 14 percent thought it would be about the same. Another 13 percent were unsure.
That’s 52 percent of adults expecting no improvement or a worsening in the economy a year from now. That’s troublesome, but not surprising.
People obviously are having a tough time shaking off the tough times of the past four-and-a-half-plus years. At the same time, though, there is little reason, right now, for a shift in their expectations.
There are troubles in Europe, China and the Middle East, for example. But more importantly, there has been no recognition on behalf of President Obama and the majority in the U.S. Senate that the U.S. desperately needs a dramatic shift in a new direction on policy.
On the policy front, all the wrong moves have been made since the recession began, including huge increases in government spending and debt; government bailouts of troubled businesses; tax increases and threatened tax increases; more regulation; absolutely no leadership on global trade policy; and monetary policy that has lost focus on price stability in favor of fruitless efforts to juice up the economy through expansive monetary policy. Meanwhile, any positives were barely detectable, such as very targeted, temporary tax measures.
If this is what continues, there is little reason to expect a robust economy a year from now, or five years from now. However, if this policy mess is moved in the exact opposite direction – such as permanent, pro-growth tax and regulatory relief; smaller government; leading the way on free trade; and monetary policy focused on price stability – then we will see real improvement in the U.S. economy.
Raymond J. Keating is chief economist for the Small Business and Entrepreneurship Council, and author of "Chuck" vs. the Business World: Business Tips on TV.