In an economy wracked by a post financial bubble environment and living in a theme park of policy uncertainty, we forecast very sluggish growth accompanied by high unemployment. As time passes the economy will naturally heal and the policy uncertainties will resolve themselves to the extent that growth will return to a 3% path and unemployment will begin on its long trajectory downward. We forecast that these more ebullient trends will become noticeable by 2012.
Higher savings and increased imports seem to be one of the key reasons why macroeconomic policy is not working the way the traditional models would have it. Thus if policy is to work it will have to restore the confidence of businesses and consumers to spend and invest in America. A real reduction in policy uncertainty would go a long way toward that end.
The problem was that we never suffered a general glut and Keynesian policies had no effect, two years wasted.
This was never about pump priming the economy, it was always about extending the current central government entitlements and adding on to them before the inevitable Republican surge. It was Rahmism at its worst.
No comments:
Post a Comment