We recently reached out to our favourite economists asking what one thing would spur the U.S. economy.
It turns out there’s a strong consensus on what must be done: clarify fiscal policy and resolve the fiscal cliff — the impending expiration of major government tax cuts and spending programs that threatens to cut GDP by 3 to 5 percentage points.
Here’s some of what they told us:
David Rosenberg, Gluskin Sheff
“Clarity over the outlook on fiscal policy. This would at least remove one cloud of uncertainty for the private sector.”
David Kotok, Cumberland Advisors
“[We need] predictable tax and spending policy instead of political deadlock and uncertainty. US growth stymied because our government has failed us. No business can make a long term plan because we do not know what the rules will be.”
Dan Greenhaus, BTIG
“As far as Im concerned, combining a permanent fix to many of the fiscal cliff issues, that serves to reduce longer term obligations (defence and medical) along with tax simplification, a reduction in corporate and personal income taxes in conjunction with a near term stimulus package, both fiscal and monetary, would be a jolt to the economy unlike anything we’ve seen. This combines elements of both demand and supply side factors such that everyone can take credit for the ensuing recovery.”
Joe LaVorgna, Deutsche Bank:
“I think there are two things: 1) Resolution of the fiscal cliff 2) time—which means the Fed should not do anything else.”