A round-up of how the fiscal cliff, national debt and uncertainty discourage economic growth.
Washington Post, page one, "‘Fiscal cliff’ already hampering U.S. economy, report says":
The “fiscal cliff” is still two months off, but the scheduled blast of tax hikes and spending cuts is already reverberating through the U.S. economy, hampering growth and, according to a new study, wiping out nearly 1 million jobs this year alone.
The report, scheduled for release Friday by the National Association of Manufacturers, predicts that the economic damage would deepen considerably if Congress fails to avert the cliff, destroying nearly 6 million jobs through 2014 and sending the unemployment rate soaring to near 12 percent.
CNBC interview with Laurence Fink, Chairman and Chief Executive Officer of BlackRock:
CEOs today are pensive about what to do next. They're just sitting back. They're not hiring as much. They're probably not spending as much. ... You know, there's a deceleration in the economy and we all start feeling it. And in addition, we expected to have a little more resolution in Europe...
I think there are reasons to take some profits in the short term, and we have to look now and see how these things are going to be resolved. If it's resolved in a broad sense, in a quick manner, then the market's going to resume its rally, and if it's another kick the can down the road, it's another small attempt to reducing our deficits, then I think we're going to have a recession in the first quarter and we're going to have -- we're going to have markets that are going to be quite unsettled.
CNBC interview with Mark T. Bertolini, CEO of Aetna, on the fiscal cliff, deficit reduction, tax reform and health care premiums.
If we go over the fiscal cliff, we're probably looking at a negative 1.7% GDP for the first quarter. That means jobs and that means that companies like ours are going to have to pull back on their capital investment. So we need to protect against that as we put our plans together. The better certainty, the more willing we are going to be able to put capital investment and jobs back into the marketplace.
Wall Street Journal, Washington Wire blog, "Business Roundtable Chief: CEOs Want Action on Deficit":
Mr. Engler, a former Republican governor of Michigan, said a new call by more than 80 chief executives – organized by the nonpartisan Fix the Debt campaign – for action on the deficit is “pretty much spot on in terms of where a lot of the CEOs are.”
“They want a big deal, and they want it pretty quick in 2013,” Mr. Engler said. Doubt about the direction of tax and spending policy “is part of that fog of uncertainty that hangs over the country and boardrooms” and is slowing economic growth, he added.
Patrick Brendan, The Corner, National Review Online, "Economy Grows 2 Percent in Third Quarter":
The BEA’s preliminary estimate for annualized U.S. GDP growth in the third quarter of this year is an anemic 2 percent. The release points to federal-government expenditures (especially defense), personal consumption, and residential fixed investment (basically home renovations and repairs). The second quarter’s growth was revised down from an annualized 1.5 percent to 1.3 percent.
Growing at 2 percent is quite weak and isn’t enough to put a dent in unemployment, but the number is strong enough that it should tamp down talk of the economy actually slowing (that said, this number will almost definitely be revised).
UPDATE (11:50 a.m.): The National Association of Manufacturers has now posted its study. From the news release, "Manufacturers: Fiscal Shock Already a Drag on Economic Growth":
Mary Andringa, NAM Board chair and president and CEO of Vermeer Corporation, remarked, “The very prospect of a fiscal cliff creates tremendous uncertainty for the markets we serve. For Vermeer, this uncertainty delays economic growth and forces us to be more cautious in a number of areas, limiting all but the most critical hiring. If we fall off the fiscal cliff, with 6 million jobs lost and the country slipping back into a recession, it would be extremely difficult for manufacturers to compete in such a negative environment for business.”
Motion to proceed to consideration of S. 744, #immigration bill, passes Senate by 84-15. Getting right into amendments.
You may also be interested in the following related articles on Business Roundtable Today…
Search the Business Roundtable Today archive for interesting content.