News What are the potential impacts of public confidence on the economy's recovery?

[phoenix:\\]

A robust and self-sustaining U.S. recovery is not on the cards, and we should now expect below trend growth for many years to come, according to Nouriel Roubini, the economist famed for his bearish views.

Fix, or help the economy, by increasing taxes on everyone. Otherwise, I agree with Nouriel.

 

[mheslep]

...

He is assuming the percent drop is based on this years growth. It is not. It is based on next years projected growth, which from what I have heard is around 4.4%, ...

Where does that figure come from? I've seen nothing anywhere close to 4% for 2013. CBO calls for 1.1% real growth next year, for whatever forecasts are worth.

The Economic Outlook
In part because of the dampening effect of the higher tax rates and curbs on spending scheduled to occur this year and next, CBO expects that the economy will continue to recover slowly, with real GDP growing by 2.0 percent this year and 1.1 percent next year (as measured by the change from the fourth quarter of the previous calendar year).

http://www.cbo.gov/publication/42905

 

[mheslep]

Fix, or help the economy, by increasing taxes on everyone. Otherwise, I agree with Nouriel.

How does raising taxes on everyone help the economy?

 

[JonDE]

Where does that figure come from? I've seen nothing anywhere close to 4% for 2013. CBO calls for 1.1% real growth next year, for whatever forecasts are worth.


http://www.cbo.gov/publication/42905

Actually I am not sure where I read that, I even looked and can't find much, although the only thing I am really finding is Obama's prediction and the CBO's and normally I don't take either of their predictions to heart.

Yet it is easy to see the difference between the CBO and Roubini. The CBO was estimating if all tax provisions expired and all tax cuts implimented, that growth would be 1% next year. Roubini is saying it starts at 1.5% and if everything is allowed to expire it would drop by 4.5%, yeilding a -3% growth rate.

If you use a little reverse engineering (and guesswork), if we keep the 4.5% as the drag on the economy and add that back into the 1% prediction, you would get a 5.5% growth rate for the CBO estimate if nothing is allowed to expire (although I think most people would agree, that number is unlikely, so more likely the 4.5% drag number is exaggerated)

Still, no one knows what next years taxes are going to look like. No one knows what cuts are going to be allowed to expire. So any predictions at this point are almost pointless.