For the past several years, the nation’s economy has been nothing short of a rollercoaster ride. The lingering effects from the recession, recent struggles in Europe and political turf wars in Washington, D.C., have everyone left wondering whether the economy will continue battling back or if a double-dip recession is in store.
During his July 18 ACA Convention session, “The Interplay Between Politics and the Economy,” economist Dr. Ken Mayland provided observations about the state of the economy and offered his outlook for the months ahead.
“Business is actually pretty darn good,” Mayland said.
Despite corporate profits showing year-over-year growth of as much as 20 to 30 percent in some cases, the economy as a whole isn’t faring as well.
The U.S. gross domestic product has had seven consecutive quarters of growth at or below 3 percent. Coming out of past recessions, this number is lagging.
“It’s very clear that this economy is substantially underperforming,” Mayland said.
Breaking apart the factors that contribute to the economy, he explained how the economy is lagging. Consumer spending, which accounts for approximately 70 percent of the economy, is slow. Job and income growth are dragging. Capital spending continues, but the residual effects of the housing bust persist. Big deficits dominate all levels of government. Economic issues in Asia and Europe have limited export growth.
All of these factors lead to modest growth, but not expected post-recession-level growth.
Mayland attributed the economic drag to government policies of the past two decades.
“A slew of wayward policymaking is hobbling business and hampering growth,” he said. “This is unlikely to change in 2012.”
As such, Mayland said the November presidential and congressional elections will have an undeniable effect on the economy’s path in the years to come.