Experts agree the economic recovery is ailing, but there’s little consensus on a cure.
President Barack Obama and his allies want to continue stimulus efforts, but Republicans argue that continuing to throw money at the problem is only driving up the national debt.
An August survey of the National Association of Business Economists found that three-quarters of its members believe that promoting economic growth should be a higher priority than reducing the national deficit, according to CNNMoney.com.
With fears about a double-dip recession growing, the survey of 84 NABE economists who work at private-sector companies and industry trade associations provides no clear answer on how to keep that from happening.
Nearly 75 percent of NABE members said they don’t think another stimulus package is necessary to get the economy back on track. At the same time, a majority believe policymakers should do more to boost job growth, said CNNMoney.com.
After rebounding from the most serious economic downturn since the Great Depression, the rate of continued economic growth has slowed significantly. Government figures released last Friday revealed that U.S. domestic product, the broadest measure of economic activity, grew at an annual rate of 1.6% in the second quarter; down sharply from the previously estimated 2.4% growth rate. And it’s a big drop from the 5% growth rate seen in the fourth quarter last year, said CNNMoney.com.
Just under half of the NABE economists said deflation is the main threat to the economy in the short term. Deflation occurs when both prices and demand fall, creating a downward spiral that can stifle economic growth for years, said CNNMoney.com. Responses were mixed whether inflation or deflation posed a greater risk to the economy over the next three years.
There was also little consensus among NABE members on when the Federal Reserve should raise interest rates and begin selling assets it bought during the crisis, said CNNMoney.com.
Only 38% of economists surveyed believe that the nation’s current financial policy is “about right,” but 64% of them supported recent legislation to extend unemployment benefits.
The economists did reach agreement on the issue of tax cuts. A majority of them said that none of the existing tax cuts on individual income, dividends and capital gains should be allowed to expire, said CNNMoney.com.
When Congress returns to session next month, they will have to determine the fate of more than 100 tax breaks that have expired or are set to expire soon.
This article was submitted by Rohit Arora, co-founder of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to