August 14th, 2010

Economists think Washington should step aside, do you?



I’m up to my eyeballs everyday in the latest financial and economic news because it’s my job. That said, I wasn’t surprised at all when I read (and I have read it many times before) that many economists feel that the economy would be better off if policy makers stepped aside and let the natural functions of the market work themselves out:

Economists are getting more pessimistic about the strength of the U.S. recovery, but they don’t think policy makers should do anything more to support it, according to the latest Wall Street Journal forecasting survey.

The 53 surveyed economists, not all of whom answered every question, offered a bleak picture of tepid growth and high unemployment.

Despite the continued challenging conditions, 30 out of 48 economists who answered the question [what are the biggest risk facing the economy] said the economy didn’t need any more fiscal or monetary stimulus.

“The economy needs government to get out of the way,” said Stephen Stanley of Pierpont Securities.

I know many of you aren’t happy with the solutions those responsible for fixing the economy have come up with to this point. The government has had a heavy hand in supporting the economy in nearly every way recently, from tax credits to federal refinance programs to keeping mortgage rates low.

I want to find out if you agree or disagree with what many economists are saying. Moving forward, do you think the economic recovery would fare better a) with Washington’s continued support, or b) without their support?

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2 Responses to “Economists think Washington should step aside, do you?”

  1. mitch Says: August 14th, 2010 at 3:42 pm

    Harry Truman once said if you put 100 economists in a room and asked them which way was up they’d all point in a different direction.

    The problem is twofold. One, they don’t offer anything substantial that someone can sink their teeth into. Two, they don’t understand how politics works as it pertains to the regular guy.

    That being, the populace needs to see something happening. Even if some economists are correct (by the way, looks like the vote wasn’t necessarily an overwhelming mandate either), Bush was vilified when he was president and that same suggestion was not only made, but followed, and things seemed to get worse. The “do nothing” strategy doesn’t work for leaders, and it doesn’t work here either, for more reasons than one.

    At least that’s my opinion. :-)

  2. Tim Manni Says: August 16th, 2010 at 11:02 am


    Especially with Congressional elections coming up, “do nothing” doesn’t seem likely. I get, I understand and agree that government interaction has and will continue to distort the marketplace, it’s just a given fact, but as you alluded to, our system of govt isn’t really based on do nothing. Your opinion is always welcome.


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