Mt. Vernon Register-News

Opinion

May 2, 2014

Slow, steady leaves economy vulnerable

The ongoing U.S. recovery might lull some into forgetting about the risks its lack of momentum presents: The longer the economy just muddles along short of escape velocity, the greater its vulnerability to external shocks.

The latest economic news is telling the same story we’ve heard for years now: The economy is growing and healing, and it would have done even better if it weren’t for some unanticipated development (the weather being the issue this time around). In reality, however, its underlying strength is insufficient to achieve the “liftoff” needed to deliver enough high-quality jobs and the durable expansion the country is capable of (and needs).

Wednesday’s unexpectedly low estimate for output growth in the first quarter of this year — an annualized 0.1 percent, down from 2.6 percent in the prior quarter — was balanced by more concurrent employment and business indicators suggesting that the unseasonably cold winter is giving way to a more active spring and summer.

Meanwhile, Wednesday’s Federal Reserve policy statement, scarcely changed from the prior one, signaled more of the same. The central bank reiterated a policy approach that is essentially on autopilot, with a regular $10 billion reduction in its monthly bond buying and short-term interest rates floored near zero.

None of this is likely to change absent a significant catalyst. Companies have the wallet to materially improve the economic outlook by investing more in facilities, equipment and hiring. They are unlikely to do so without a more comprehensive policy approach, one that goes well beyond what the Fed has been providing markets though its extraordinary bond-buying program.

To enable a stronger and higher-quality recovery, the government needs to do its part. Greater clarity on corporate tax reform and increased infrastructure spending, for example, could improve the environment for business investment and, more generally, help generate the income households need to reduce still-heavy debt loads.

Text Only
Opinion
  • A rare experience Alexandra Petri’s editorial, “What exactly are we seeing in Ferguson” is well written and did something which has increasingly become a rare experience for me. Her article caused me to think!Petri makes the case for media coverage of American events,

    August 19, 2014

  • Naive? Simple? I will admit outright that I may be a little naïve and tend to look at things through a simple prism. I received a suggestion for a column with an accompanying article written by By Reed Abelson and Eric Lichtblau concerning the failure of our govern

    August 19, 2014

  • Don't pass 'coup clause' with a security waiver It is a sad reality that national security waivers often render human rights laws moot, inviting the government to overuse the loophole to accommodate immediate needs. The “coup clause,” which mandates foreign aid suspension to countries after a mili

    August 19, 2014

  • Clinton could end up like Gore Although we’re all still sort of pretending that it remains to be seen whether Hillary Clinton will run for president in 2016, she recently gave the most definitive confirmation she has to date of her impending candidacy. No, she didn’t say the words

    August 16, 2014

  • Guru will work for food ‘At the height of its power, the photography company Kodak employed more than 140,000 people and was worth $28 billion dollars. They even invented the first digital camera. But today Kodak is bankrupt, and the new face of digital photography has beco

    August 16, 2014

  • Ferguson police fumbled protests From the chief of the police department to the president of the United States, government officials on Thursday promised a different approach to the racially-charged unrest in the St. Louis suburb of Ferguson. But the situation demands a lot more tha

    August 16, 2014

  • A better tax code solution: taxing consumption According to much conventional wisdom, the flap over corporate “tax inversions” is just the latest evidence that the tax code needs a comprehensive overhaul like the one agreed to by congressional leaders and President Reagan in 1986.Whether you cons

    August 15, 2014

  • Attacking economic inequality ‘The question is, ‘How do we help people at the bottom rather than thwart people at the top?’” Harvard economics professor Gregory Mankiw, who served as a leading adviser to President George W. Bush and Republican presidential candidate Mitt Romney,

    August 15, 2014

  • Giving it all away Love. Hate. Success. Failure. Talents. Handicaps. Burdens. Color. Music. Differences. They are (contrary to cotton’s claim) the fabric of our lives. Imagine a world where it is all turned off, suppressed in a manufactured semblance of order. There is

    August 15, 2014

  • More they learn, less they like Democrats have long believed Obamacare would become more popular once it was fully in place and Americans got a chance to see it up close. So why is Obamacare less popular now than a few months ago? Because it is fully in place and Americans have had

    August 14, 2014

Twitter Updates
Facebook
Stocks