Tag Archives: fiscal

Is the US Economy Really About to Go Boom?

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Politico asked 8 of us for a prognosis on US growth in the new year. This was my response —

Something important will get better in 2014: Fiscal policy will stop hurting the economy. The results should show up as expansion in such service sectors as health, education and construction.

The biggest impediment to economic expansion over the last three years has been destructive budget policy coming out of the Congress: misguided fiscal drag in the short term (crude cuts in spending, especially under the sequester; the expiration a year ago of Obama’s payroll tax holiday); repeated unnecessary disruptive and uncertainty-maximizing political crises (debt ceiling showdowns and government shutdown); and little progress on the genuine longer-term fiscal problem, which is the 40-year prognosis for U.S. debt (a result of projected rapid growth in entitlement spending). These fiscal failures have together probably subtracted well over a percentage point from U.S. growth in each of the last three years. read more

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Stan Fischer, the Fed, and Sub-par US Growth

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      Now that Janet Yellen is to be Chair of the US Federal Reserve Board, attention has turned to the candidate to succeed her as Vice Chair.  Stanley Fischer would be the perfect choice.   He has an ideal combination of all the desirable qualities, unique in the literal sense that nobody else has them.  During his academic career, Fischer was one of the most accomplished scholars of monetary economics.  Subsequently he served as Chief Economist of the World Bank, number two at the International Monetary Fund, and most recently Governor of the central bank of Israel.   He was a star performer in each of these positions.   I thought in 2000 he should have been made Managing Director of the IMF.   read more

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Recent Jobs & Growth Numbers: Good or Bad?

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This morning’s US employment report shows that July was the 34th consecutive month of job increases.   Earlier in the week, the Commerce Department report showed that the 2nd quarter was the 16th consecutive quarter of positive GDP growth.   Of course, the growth rates in employment and income have not been anywhere near as strong as we would like, nor as strong as they could be if we had a more intelligent fiscal policy in Washington.  But the US economy is doing much better than what most other industrialized countries have been experiencing.   Many European countries haven’t even recovered from the Great Recession, with GDPs currently still below their peaks of six years ago. read more

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