An organization for corporate economists, the National Association for Business Economics (NABE). published its bi-annual survey this morning and the results contain a message to President Obama–Fix the Deficit! Although there is a difference in opinion whether the deficit is going to be worse in the next ten years or the ten years after that there is a consensus that the deficit/debt is going to hurt this country’s economic future:
“An overwhelming majority of the NABE Economic Policy Survey panel believes that the projected deficits over the next few decades represent a principal challenge facing the nation, although there was no consensus among panelists who participate in the NABE Policy Survey regarding the appropriateness of fiscal policy at present,” said NABE Policy Survey Committee Chair Jay Bryson, Global Economist at Wells Fargo Securities. “Most panelists favor a mix of policy approaches that includes some form of spending restraint as the best way to address long-term deficits, with a plurality favoring a mixed approach of spending restraint and revenue increases.
“There continues to be greater consensus regarding the appropriateness of monetary policy, with a majority of the NABE panelists indicating that current monetary policy is ‘about right.’ About half of the panelists believe that the Federal Reserve will begin to wind down its asset purchase program by the end of the year, while the vast majority looks for the Fed to maintain its current target for the fed funds rate through the first half of 2014. There is significant support for the appropriateness of the Fed’s 2 1⁄2 percent inflation threshold, although there is no clear consensus about the appropriateness of the Fed’s 6 1⁄2 percent unemployment threshold.
Whether it is now, the next ten years or the ten years after that, 92% of the business economists agree that the deficit is the principal fiscal challenge facing this country
Figure 1: The Principal Fiscal Challenge Facing the Nation
Who would you vote for if the elections were held today?
When asked, ”What is the best way to address the current budget
imbalance?” a small plurality (34 percent) responded that the best
approach would be policies “to stimulate economic growth.” and 32% favored a combination of reduced spending and increased
Almost 20 percent of survey respondents indicated a preference
for implementing spending cuts as the primary deficit reduction measure
while 11 percent recommended no policy changes at present as they
believe the present deficit is either not material or is not the primary
economic challenge facing the nation.
More panelists believe projected deficits in the next two decades are
more threatening to economic growth than the current deficit, and a
plurality (39 percent) believes that a mix of spending restraint and
increased revenues would be the best approach to address these deficits This policy approach was more popular among panelists
than a policy that focuses primarily on spending restraint (cited by 32
percent of panelists) or one that focuses primarily on increased
revenues (cited by only 2 percent).
Figure 2: Best Way to Address Rise in Deficit-to-GDP Ratio in 2020s and 2030s
The study also reported a broader agreement about monetary policy, as a majority of economists think the Federal Reserve’s current policy is “about right.” But the respondents widely diverged on when they think the Fed will stop its policy of buying bonds to prop up the economy.
About 39 percent of survey respondents think the Fed will begin slowing the program in the fourth quarter of this year. Some, about 7 percent, think it won’t happen until 2015 or later. About 39 percent think the Fed will wait until 2015 or later to begin raising its interest rate targets, its traditional tool for balancing economic growth with keeping inflation in check.
These economists seem to be disagreeing with the president’s policy of spending more and taxing more as a way of fixing out deficit/economic problems. Perhaps this means the entire panel faces an IRS audit, or that the president will spin these results to agree with his policies.
Before he does that make sure to read the entire report here and make up your own mind.