Michelle Meyer Explains The Source Of The Next 'Uncertainty Shock'

Bank of America Merrill Lynch senior economist Michelle Meyer appeared on Bloomberg TV with a cautious outlook on both housing and fiscal tightening.

In particular, she said that fiscal tightening is one of the biggest threats to U.S. economic growth, and that fiscal drag could amount to as much as 4 per cent if lawmakers don’t change their current policies.

“Yes, we understand that there’s momentum right now. We’re encouraged by some of the labour market indicators, but we’re not yet convinced. And given the amount of fiscal tightening, we think there will be another uncertainty shock.”

She qualified that a 4 per cent shock isn’t her team’s baseline policy—it is really something like 2 per cent—but added, “There’s the possibility of even larger tightening if you don’t see policy.”

Watch her full interview below:

SEE ALSO: Michelle Meyer’s Housing Outlook For 2012 >

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.